May 6, 2024: Credit outstanding to the housing sector surged by almost Rs 10 lakh crore over the past two fiscal years, reaching a historic high of Rs 27.23 lakh crore in March of this year, according to data from the Reserve Bank of India (RBI) on ‘Sectoral Deployment of Bank Credit’. Experts in banking and real estate attribute this growth in housing credit outstanding to a robust revival in the residential property market following the COVID-19 pandemic, driven by pent-up demand.
In March 2024, credit outstanding to the housing sector (including priority sector housing) stood at Rs 27,22,720 crore, up from Rs 19,88,532 crore in March 2023, and Rs 17,26,697 crore in March 2022, as per RBI data on sectoral deployment of bank credit. Additionally, the data reveals that credit outstanding towards commercial real estate reached Rs 4,48,145 crore in March 2024, compared to Rs 2,97,231 crore in March 2022.
The Indian real estate sector, which sustains over 200 ancillary industries including cement and steel, has experienced strong demand since 2022 after a decade-long slump due to subdued sales and stable prices. Challenges such as disruptions caused by regulations like RERA, GST, and demonetisation, along with a trust deficit in the sector due to project delays by developers, contributed to this downturn. However, the sector rebounded post-COVID as the pandemic underscored the significance of homeownership. Industry experts anticipate the sector to achieve a milestone of $1 trillion by 2030.
Realtors believe that the sector is likely in the second or third year of a prolonged upcycle. To further stimulate housing demand, industry bodies such as CREDAI and NAREDCO have urged the government to increase tax benefits on home loans. They advocate for enhancing the deduction allowed on interest payments on home loans to Rs 5 lakh from the current Rs 2 lakh.
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