Housing Credit Sees K-Shaped Recovery After Pandemic
High Cost Housing loans grew at 21 per cent, whereas priority housing which is also lower cost housing is struggling to pick up. In 2024, it grew by 0.7 per cent, as per the data of Capitalmind
By : Sangeetha G
Update: 2025-06-07 10:47 GMT
Chennai: The pandemic had hit the housing sector disproportionately, leading to a k-shaped recovery in housing credit. While high cost housing credit has maintained a growth above 20 per cent since pandemic, low-cost housing credit growth is struggling to remain positive. The rate cut is expected to boost affordable housing credit, finds the industry.
Housing credit in general has grown by 15.3 per cent in 2024, with premium and luxury housing accounting for most of the growth. High Cost Housing loans grew at 21 per cent, whereas priority housing which is also lower cost housing is struggling to pick up. In 2024, it grew by 0.7 per cent, as per the data of Capitalmind.
From over 25 per cent in July 2020, credit growth in low-cost housing has been falling since the pandemic. The sector even de-grew during July-August last year.
On the other hand, high cost housing credit has been growing between 20 to 30 per cent ever since the pandemic.
The general economic recovery after the pandemic has been k-shaped with the rich getting richer and poor poorer. Luxury housing sales share rose from 7 per cent in 2019 to 26 per cent in 2024. Affordable housing demand, on the other hand, saw its share shrinking from 40 per cent in H2 2020 to 21 per cent in H2 2023.
Further, among the affluent, the work-from-home concept saw people going for bigger houses. The average size of houses has been growing in key cities. According to Anarock Group, the average flat sizes in fresh supply in the top 7 cities grew 7 per cent from around 1,150 sq. ft. in 2018 to 1,225 sq. ft. in Q1 2023.
The stamp duty cuts in Maharashtra and Karnataka also saw several large luxury property deals in Mumbai, Pune and Bangalore.
According to CREDAI, the RBI rate cut will improve consumers' sentiment, immensely benefitting mid-income and affordable housing segments, which have been struggling in the last few years.