RBI data shows significant surge in housing sector credit
The Reserve Bank of India (RBI) has reported a substantial increase in credit outstanding to the housing sector. Over the past two fiscal years, this figure has risen by nearly ₹10 lakh crore. According to RBI's 'Sectoral Deployment of Bank Credit' data, the credit outstanding reached an all-time high of ₹27.23 lakh crore in March 2024, up from ₹19.88 lakh crore in March 2023, and ₹17.26 lakh crore in March 2022.
Experts attribute growth to post-pandemic recovery
Banking and real estate experts attribute this significant growth in credit outstanding, to a robust recovery in the residential property market following the COVID-19 pandemic. Chief Economist with Bank of Baroda, Madan Sabnavis, stated that this surge reflects the pent-up demand for home buying over the last two years due to the pandemic. He also predicted that while home loan growth will remain strong, it might slow down to 15-20% due to a higher base.
Commercial real estate also sees credit increase
The RBI data also revealed rise in credit outstanding toward commercial real estate, which stood at ₹4,48,145 crore in March 2024, up from ₹2,97,231 crore in March 2022. Samir Jasuja, PropEquity CEO and MD, suggested that this increase is primarily due to a significant rise in properties launched and sold over the last two fiscal years. He added that major Tier-1 cities have seen high rates of price appreciation since FY2021, leading to rise in average loan size per property.
Housing finance sector predicted to reach $1 trillion
While mortgage penetration level is steadily rising in India, it remains relatively lower than in developed economies, indicating significant potential for growth. Industry experts predict the sector to reach a $1 trillion milestone by 2030. They anticipate this trend to go on with overall housing finance expected to rise by 12-14% annually in the near-to-medium term, supported by strong demand.
