Chennai

Despite several hikes in the repo rates over the last 10 months, there has not been a dampening of housing demand, which has now reached pre-Covid levels, says D Lakshminarayanan, Managing Director, Sundaram Home Finance.

During the pre-Covid period, people were borrowing at 9-9.25%. But rates dropped during the Covid phase and it has reached the same pre-Covid levels now. The interest rates are not very high when compared with the past. “Therefore, we have just come back from an artificial low to where it used to be,” said Lakshminarayanan, adding, “We are not sitting on an unprecedented high rate, and the demand is healthy at this rate also.”

The fiscal gone by was a good year for the real estate sector. The industry grew at double digits and has reached pre-Covid levels. Markets continued to recover, and there were enough indications of fairly promising longer-term growth. There was growth across markets, customer segments, and was not restricted to select pockets.

“Our growth too has been in line with the industry trend,” he said and final figures will be out after the Company’s Board meeting.

SHF’s disbursements for the nine months ended December 31, 2022, went up 79% to ₹2760 crore when compared with the year-earlier period.

Also read: Sundaram Home Finance hikes deposit rates, 5th upward revision in FY23

On the outlook for housing demand, Lakshminarayanan said, “While there are a few external challenges like the Ukraine crisis and the US inflation, from an Indian economy growth perspective, there is a positive trend.”

The housing demand has witnessed some new trends where there has been a strong preference for ‘Ready to Move’ homes as against investing in a house from the construction stage. Also, with the WFH (work-from-home) model and online classes for children, people have been looking for larger apartments to give them the extra freedom to work. “Integrated complexes are increasingly becoming popular as a way of community living,” he added.

Stability in prices

In the past, people bought real estate as just an investment. But in recent times, the real end users are investing now in homes. A majority of home purchases in recent times have been from those who intend to occupy houses. This has led to stability in prices. There has not been much speculative buying in the real estate space in the recent past. Most cities in the South, except Hyderabad, have not seen a big increase in real estate prices.

Prices in Hyderabad have gone up in successive years driven by the increase in land parcels. The State is connecting the inner ring road to the regional ring road. Also, there is a significant road infrastructure development in Hyderabad with road connectivity of the city to the outskirts, and the outskirts to the national highway. These infra projects have kept up the price momentum in Hyderabad and driven up the prices there.

SHF has been aggressively exploring the rural market in recent months, including foraying into the small business loans segment where it has already opened a dozen branches in remote towns in Tamil Nadu.

Also read: Sundaram Home to double small biz loan branches in six months

Smaller towns are becoming hubs for companies in many sectors. Job opportunities are increasing, resulting in higher income. People are finding newer avenues of employment.

“We are also seeing an entrepreneurial wave. All these have led to the aspirational levels of people in Tier 2 and 3 towns going up quite significantly. Clearly, smaller towns are growing faster, and we are seeing a lot of the incremental growth coming from there,” he added.

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