Slowdown - not really !!!
Slowdown? Home Loans Grow 20-25%
Contrary to popular perceptions that the Indian housing market is in the doldrums, the home loan market is exhibiting surprisingly positive trends. Sunday ET spoke to a cross-section of bankers and came out with the conclusion that the home loan segment is quite robust. During the last three months, the segment has witnessed an average growth of 20-25%, largely due to small-ticket buying.
And with real estate developers planning to announce major discounts in the coming days, housing finance companies are getting ready to meet an increased demand as they expect more first-time buyers to come to the market. Bankers say the demand never evaporated from the market, it just changed hands from speculators to genuine home buyers. Says Uday Sareen, country head, retail banking, ING Vysya Bank: "It's all about perception. We have seen a growth of over 40% in the home loan segment in the recent quarter against the year-ago period. This shows that genuine buyers still exist in the market." Demand to go up further
"WITH developers now offering good deals, we expect the demand to further go up in the coming days." The bank's average loan ticket size is Rs 20-25 lakh.
LIC Housing Finance is not far behind. The housing finance company saw 33% growth in October, year-on-year, in comparison to 29% growth last October, year-on-year. "It shows that the end-user is still persistant. In fact, the average loan size has also grown from Rs 10.6 lakh to Rs 13 lakh. We are very much on track to achieve our growth target of 30%. We have witnessed maximum growth in Chennai and Hyderabad among metros," he said.
Bankers believe that the interest rate cut alone can not prop up demand in the Indian housing market, unless it makes sense for all the stakeholders -- customer, builder, and financier. "It's a tall order. It's not going to help in the long-term. Interest rate. property price and income improvement create demand for housing. Reducing interest rate alone can't solve the problem, there has to be a genuine cut by realty players in property prices to prop up the demand," feels Mr Nair.
Agrees Kapil Wadhawan, vice chairman & managing director of Dewan Housing Finance. "There is a genuine need for a rate cut," he said. The company has registered a growth of around 17% over the six month period, and the average loan size in their case has been Rs 6 lakh. "We have set ourselves a realistic target of 20% growth this financial year," he said.
Shravan Gupta, executive vice-chairman & MD, Emaar-MGF believes that today's market is experiencing greater end-user participation. "It is a good time to buy property for your own use. The consumer needs to make prudent decisions based on his value perception of a product from a developer with a proven track record that seamlessly addresses his requirements. Only price should not be the determining factor as it clearly needs to be reasonable and feasible enough for the developer to execute his project," he said.
Mr Nair has an optimistic view on the overall macro environment. "The temporary perception of liquidity shortage should disappear soon. The fact is that genuine user is still buying, only his expectations have reduced in line with affordability," he believes.
Source: The Economic Times
Contrary to popular perceptions that the Indian housing market is in the doldrums, the home loan market is exhibiting surprisingly positive trends. Sunday ET spoke to a cross-section of bankers and came out with the conclusion that the home loan segment is quite robust. During the last three months, the segment has witnessed an average growth of 20-25%, largely due to small-ticket buying.
And with real estate developers planning to announce major discounts in the coming days, housing finance companies are getting ready to meet an increased demand as they expect more first-time buyers to come to the market. Bankers say the demand never evaporated from the market, it just changed hands from speculators to genuine home buyers. Says Uday Sareen, country head, retail banking, ING Vysya Bank: "It's all about perception. We have seen a growth of over 40% in the home loan segment in the recent quarter against the year-ago period. This shows that genuine buyers still exist in the market." Demand to go up further
"WITH developers now offering good deals, we expect the demand to further go up in the coming days." The bank's average loan ticket size is Rs 20-25 lakh.
LIC Housing Finance is not far behind. The housing finance company saw 33% growth in October, year-on-year, in comparison to 29% growth last October, year-on-year. "It shows that the end-user is still persistant. In fact, the average loan size has also grown from Rs 10.6 lakh to Rs 13 lakh. We are very much on track to achieve our growth target of 30%. We have witnessed maximum growth in Chennai and Hyderabad among metros," he said.
Bankers believe that the interest rate cut alone can not prop up demand in the Indian housing market, unless it makes sense for all the stakeholders -- customer, builder, and financier. "It's a tall order. It's not going to help in the long-term. Interest rate. property price and income improvement create demand for housing. Reducing interest rate alone can't solve the problem, there has to be a genuine cut by realty players in property prices to prop up the demand," feels Mr Nair.
Agrees Kapil Wadhawan, vice chairman & managing director of Dewan Housing Finance. "There is a genuine need for a rate cut," he said. The company has registered a growth of around 17% over the six month period, and the average loan size in their case has been Rs 6 lakh. "We have set ourselves a realistic target of 20% growth this financial year," he said.
Shravan Gupta, executive vice-chairman & MD, Emaar-MGF believes that today's market is experiencing greater end-user participation. "It is a good time to buy property for your own use. The consumer needs to make prudent decisions based on his value perception of a product from a developer with a proven track record that seamlessly addresses his requirements. Only price should not be the determining factor as it clearly needs to be reasonable and feasible enough for the developer to execute his project," he said.
Mr Nair has an optimistic view on the overall macro environment. "The temporary perception of liquidity shortage should disappear soon. The fact is that genuine user is still buying, only his expectations have reduced in line with affordability," he believes.
Source: The Economic Times