New Delhi [India], March 5 (ANI): The housing finance market, valued at around Rs 33 trillion, is expected to grow at a CAGR of 15-16 percent between 2024-25 and 2029-30 to Rs 77-81 trillion, CareEdge Ratings has asserted.
CareEdge Ratings believes that this growth will be driven by robust structural elements and favourable government incentives, making housing finance an attractive asset class for lenders.
The rating agency said that the residential properties market remains buoyant, a key driver of the housing finance industry, witnessing an absolute growth of 74 percent since 2019 to 4.6 lakh units in 2024.
While sales performance in 2024 normalised, it still reflected sustained buyer confidence.
Over 2021-24, banks (including the effect of the HDFC Ltd merger) have grown at a compounded annual growth rate (CAGR) of 17 percent in the housing loan space, while Housing Finance Companies (HFCs) have grown by 12 percent.
Though banks continued to dominate the housing loan market (market share of 74.5 percent as of March 31, 2024), facilitated by cost-of-funds advantage, reach, portfolio buyouts, and co-lending arrangements, CareEdge Ratings believes that both banks and HFCs have ample space to grow, given the growth potential of the housing finance market.
The rating agency said that the market share of HFCs was stable at 19 per cent as of March 31, 2024, and this trend is expected to continue. In 2023-24, HFCs’ loan portfolio grew by 13.2 percent to Rs 9.6 trillion, aligning with CareEdge Rating’s growth estimate of 12-14 percent.
For 2024-25 and 2025-26, CareEdge Ratings anticipates year-on-year growth of 12.7 percent and 13.5 percent, respectively, driven by robust equity inflows and capital reserves.
The retail segment remains the primary growth driver for HFCs, with cautious growth observed in wholesale.
In line with growth trends, the asset quality of HFCs has seen a sharp improvement, with gross non-performing assets (GNPA) of 2.2 per cent as of March 31, 2024, against the peak of 4.3 per cent as of March 31, 2022. (ANI)
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