India Ratings and Research (Ind-Ra) study predicts Affordable housing finance (largely for loan ticket size up to INR1.5 million) to become a large segment for housing finance companies (HFCs) in the next five years, with the estimated share to increase to around 37% in FY22 (FY17: 26%). The accelerated urbanisation on account of fast economic growth over the last decade and a half has created massive need for affordable housing.
The agency anticipates a demand for 25 million homes (4x of the entire current housing finance stock) over FY17-FY22 in the Medium Income Group (MIG) and Lower Income Group (LIG) categories. A combination of factors such as: 1) government financial and policy thrust, 2) regulatory support, 3) rising urbanisation, 4) increasing nuclearisation of families, and 5) increasing affordability is converting latent demand into a commercially lucrative business opportunity. Ind-Ra expects the sector to attract over INR 200 billion of equity inflows over FY17-FY22 which would support growth.