India’s home loan market, currently valued at about ₹24-lakh crore, is expected to double in the next 5 years, with mortgage to GDP ratio rising commensurately from current 11 per cent, according to State Bank of India’s economic research report “Ecowrap”.

This will mirror the overall trend in the country’s aspirations to become a $5 trillion economy by then, the report said.

The share of ‘Housing Loans’ in ‘Bank Credit’ has increased to 14.4 per cent in June 2022 from 13.1 per cent in March 2020. Housing contributes around 50 per cent of the personal/retail loans.

SBI’s Econmic Research Department (ERD) noted the total home loan portfolio grew by 10 per cent in FY22, with districts in tier-3 and tier-4 areas growing at a much faster rate than tier-1 and tier-2 districts, post pandemic

Compounded annual growth rate of home loan portfolio during FY22 and FY19 was at 11 per cent, with higher growth in tier-3 and tier-4 districts at 12-13 per cent.

Growth in smaller cities

The report said housing prices increased more in smaller cities and suburbs than in major cities over the last year, reflecting the shifting demand across residential housing.

Visakhapatnam, Guwahati, Raipur, Surat, Vadodara, Jaipur, Lucknow, Dehradun and Coimbatore have witnessed higher growth in housing prices.

Soumya Kanti Ghosh, Group Chief Economic Adviser, believes the increasing trend of work from home and freelance jobs led to higher demand of homes in smaller cities and towns.

CityGrowth in March 2022Growth in March 2021
Visakhapatnam 11.3% -2.5%
Guwahati 15.7%-6.3%
Raipur 19.1%-1.8%
Surat 11.2%-5.5%
Vadodara 12.6%No change
Jaipur 9.6%-1%
Lucknow 17.4%-1.8%
Dehradun 11.6%-7.4%
Coimbatore 17.7%-0.9%

Fresh disbursal have shown maximum YoY growth in tier-3 and below districts in FY22 over FY19, as per the report. Amongst the top 20 tier-3 districts, maximum number of districts are from Punjab and Karnataka (5 each). These being 20 semi-urban districts, together their share in GDP is about 2.9 per cent.

Amongst tier-4 districts, Uttar Pradesh tops the list having 6 districts amongst the top 20 with maximum growth in fresh disbursal in FY22 over FY19. These being 20 rural districts, together their share in GDP is about 0.8 per cent.

Female borrowers

The ERD report noted the number of female borrowers in new disbursements increased significantly in FY22 in tier-3 and -4 districts.

Among the top 20 districts with highest share of female borrowers in fresh home loan disbursal in FY22, 6 districts are from Chhattisgarh, 3 from Gujarat and Haryana each. These districts have on an average 49 per cent female share in total population.

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