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Priya Nair

Mumbai , April 1

THE home loans market grew at 30 per cent in the just concluded fiscal, and bankers and housing finance companies expect the sector to maintain the current growth rate in the next year.

According to them, the growth in the housing sector will be aided by an increase in jobs in service sectors such as information technology and banking.

Said Mr V.S. Rangan, General Manager, HDFC, the service sector is growing and people in this sector are investing in houses. The demand has also been fuelled by the availability of houses at different price brackets and easy financing facilities.

The markets is expected to grow rapidly in areas witnessing IT and ITeS activities, said Mr Rajiv Sabharwal, General Manager, ICICI Bank. Cities such as Banglore, Hyderabad, Gurgaon, Noida and Pune will see growth, apart from the metros.

"The housing finance market has grown by 30 per cent. A growth of about 30-40 per cent next year is likely. Today 60 to 75 per cent of the houses are financed by loans," Mr Sabharwal said.

According to industry sources, the home loan boom, which began three years ago, is likely get a further boost through some Budget proposals, including the retention of income-tax exemption for interest paid on home loans. The thrust on infrastructure is another positive that will indirectly help housing loans, said Mr Sabharwal, Another added attraction has been the reduction of stamp duty rates by several States, including Maharashtra.

"The Rs 5,500-crore megacity fund, which aims to create better infrastructure in larger cities, is good for the housing sector. Infrastructure improves the potential market for housing," Mr Sabharwal said.

HDFC's Mr Rangan said, "Investment in infrastructure will benefit the housing sector in terms of availability, although it has a long gestation."

Relaxing the norms for foreign direct investment in real estate will also help the housing sector, said Mr Puneet Chaddha, Senior Vice-President and Head of Cards and Retail Assets, HSBC India. He said, "Currently, there is a shortfall of around 40 million housing units. In the residential segment 100 per cent FDI has been permitted in townships with a minimum land area of 25 acres. Earlier this was allowed in townships of 100 acres. This will provide easy entry for foreign developers and will lead to an increased supply of residential and commercial establishments."

ICICI Bank's home loan disbursements grew 52 per cent to Rs 13,147 crore in April - December 2004 compared with the same period in the previous year. HDFC saw its disbursals rise 27 per cent to Rs 10,652 crore in the same period.

State Bank of India has also managed between 35 and 40 per cent growth in the housing loans portfolio, said the sources. In April to December 2004, SBI's housing advances grew by Rs 6,235 crore and the total outstanding at the end of December 2004 was Rs 23,317 crore.

Housing loans are also one of the safest categories of loans, with least delinquencies. For ICICI Bank, delinquency in housing loans is less than 0.30 per cent and for HDFC, net NPAs is less than 1 per cent. State Bank of India has managed to rein in its bad loans at 3 per cent, the sources said.

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