The overall housing credit as on March 31, 2017, stood at Rs 14.4 trillion, as against Rs 12.4 trillion as on March 31, 2016, indicating a growth of 16 per cent in the financial year 2016-17. In the financial year ended March 2016, the housing credit grew by 19 per cent.
“The growth in the sector (in FY17) was impacted by a slowdown in new project launches, with buyers and investors deferring their home purchase decisions, in expectation of a decline in real estate prices,” ICRA said in a report. While the slowdown was across both, housing finance companies (HFCs) and banks, the decline in the pace of growth of the latter was higher – from 18 per cent in FY 2016 to 15 per cent in fiscal 2017. It was largely because banks were operationally tied up in the second half of FY 2017, on account of demonetisation, the report said.
See also: Risk weights cut will weaken banks’ protection from the housing sector: Moody’s
“HFCs operating in the affordable housing space, with a total portfolio of Rs 1.2 trillion, continued to grow at a faster pace of 28 per cent in the previous fiscal, compared to the industry,” ICRA’s senior vice-president and group head (financial sector ratings), Rohit Inamdar, said. The HFCs’ growth was supported by an increase in supply, due to the launch of affordable housing projects and the infrastructure status accorded to the sector. They were also helped by the improved borrower affordability, supported by lower interest rates and the credit-linked subsidy scheme, ICRA said.
Traditional lenders that have historically focused on the prime segment, have also started lending to this segment, the report said. The rating agency expects affordable housing finance to continue to outpace the industry, going forward. ICRA expects HFCs’ gross non-performing assets (NPAs) to remain range-bound between 0.9-1.3 per cent in the current financial year.
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