As per latest ICRA report: The Government’s focus on affordable housing, favorable regulations could push overall housing credit growth to 20-22% FY16 onwards, which could lead to improved mortgage penetration from current levels of 8.2%.
The housing finance market in India has crossed Rs 10 lakh crore mark as on December 31, 2014. Of this Rs 10 lakh crore housing loan book, Rs 6.3 lakh crore loans are with the banking sector, and balance Rs 3.7 lakh crore with housing finance companies (HFCs) and Non-Banking Financial Companies (NBFCs).
As per news interviews, SBI alone has nearly 25% market share for new home loans, with a total home loan book of Rs 1.6 lakh crore. LIC Housing Finance is growing nicely because of the well-established LIC Agent network in India. HDFC is one of the market leaders and is growing at 20% per annum consistently.
Is Mumbai real estate market in a bubble? I am not sure. It is true that prices have not corrected as much as people were expecting but at most places, rates have come down by 10-20%, and genuine buyers could get further discounts by developers who are keen to get cashflows. Rapid digitization has made it extremely easy to look up and buy real estate in the city. The tech savvy population is a lot more confident researching on probable real estate options online and even completing the end purchase through the internet. This has led to a growth in consumption of ultra-small, low-budget apartments, which may still be affordable to some extent in the current market scenario in suburban Mumbai like Ghatkopar, Mulund, Thane, Mira Road, Virar, Panvel, and Navi Mumbai. This has led to the rise in transactions and a steady rise in prices for these low-budget houses. As per the ‘Housing for all by 2022’ plan of the current government the most number of households that the govt needs to provide is in the low-cost housing sector in the price range of Rs 10-20 lakh per housing unit.
FY2012 was a very challenging year for the Indian economy. The year witnessed turmoil as the GDP growth rate came down to 6.5%, the lowest in the last 5 years. This was a result of the various macro-economic factors, global economy being at the brink of a recession, financial turmoil in the Euro zone and slowdown in the economic decisions (or lack of them) by the Indian Government and the 13 consecutive interest rate hikes by the Reserve Bank of India (RBI).
Amidst a slowdown in economic growth, the Indian real estate sector continued to face a challenging environment. With an overall decline in volumes, pricing was a key issue in some geographies marked by over-supply and lack of sustained economic activity. Key markets were also impacted by policy inertia, leading to significant reduction in volumes on account of lack of fresh approvals.
On the regulatory front, the Indian govt has proposed Land Acquisition Bill and Real Estate Regulation and Development Bill. These Bills are yet to achieve consensus and enactment. Continue reading Indian Real Estate Sector Review 2012→
Here is the Chairman’s annual letter from HDIL (Housing Development & Infrastructure Ltd), one of India’s leading real estate company with a strong base in Mumbai metropolitan region (MMR), having a successful track record in every kind of real estate project. The letter offers a good perspective to real estate investors like us.
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Dear Shareholders,
The year 2011-12 was a year of major economic upheaval, marked by sluggish growth, global uncertainties and low market sentiments. The real estate sector in India was severely impacted by the liquidity
crisis, high inflation, slowdown of growth, consumption and investment cycle. The slowdown in the economy and the rise in real estate prices during previous years plummeted demand across all segments of the
sector leading to a decline in overall growth in Real Estate sector during the year.
The Reserve Bank of India (RBI) increased the interest rates, to restrict inflationary forces and to curtail excessive spending. As a result, the cost of borrowings also increased thus affecting the
overall performance of the sector and thus needless to say, the industry cannot be completely immune to such repercussions. Residential segment of Real Estate saw curtailed demand due to rising mortgage
rates. Changes in regulations within Mumbai and its development control regulations also contributed to the delays in its approval processes. Continue reading Annual Letter from HDIL (Housing Development & Infrastructure Ltd)→