Market Trends of India Home Mortgage Finance Industry
This section covers the major market trends shaping the India Home Mortgage Finance Market according to our research experts:
Availability of Affordable Housing in India is Driving the Market Growth
The housing market has undergone a structural transformation in both the demand and supply sides over the last decade. This has resulted in a safe and attractive home-buying environment for buyers. Housing loans contribute around 50% of personal/retail loans. Housing affordability has improved over the last eight years. It reached its best levels last fiscal year and remains fairly attractive. This is expected to boost end user demand in key segments of affordable and mid-income. In FY 2000, property prices, on average, were 5.9 times the annual income of a buyer. In FY2020, the price of the property that a person purchased was, on average, 3.3 times the annual income. With affordability rising, one can buy a bigger property with their current income. Home loan rates are down by about 1.2-1.3% compared to last year alone. This is expected to drive the growth of the home mortgage finance market in India during the forecast period.
Increase in Work From Home Settings Can Surge the Demand for Housing in Tier-III and Tier-IV Cities
The trend of working from home during the COVID-19 lockdown has led to an increase in home loan demand in tier-III and tier-IV towns and districts. Many companies have shifted to a work-from-home setting, and many outstation employees have returned to their native places to cut living costs in the overcrowded metro and tier-I cities. Now with many companies, especially in the tech and IT industry continuing with a hybrid or a work-from-home setting, the demand for upscale residential projects in tier-III and tier-IV cities has seen a boost. The share of housing loans contributes to 50% of retail or personal loans by scheduled commercial banks (SCBs), which has increased to 14.14% in June 2022, up from 13.1% in March 2020 during the pandemic. Work from home has emerged as the dominant factor behind the increased demand for home loans across tier-III and tier-IV towns and districts. This is expected to grow the market during the forecast period.
