ICRA report establishes Housing Credit Growth to be at 16% in FY17

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According to rating agency ICRA (Investment Information & Credit Rating Agency), total housing credit growth moderated to 16% in the financial year 2016-17 due to lack of new project launches and as investors deferred their home purchase decisions.

In the financial year that ended in March, the housing credit grew by 19%. Overall housing credit stood at Rs 14.4 trillion as on March 31, 2017, as against Rs 12.4 trillion as on March 31, 2016.

Icra stated in a report, “The growth in the sector (in FY17) was impacted by a slowdown in new project launches with buyers and investors deferring their home purchase decisions in expectation of a decline in real estate prices.”

While the slowdown was across both housing finance companies (HFCs) and banks, the decline in the pace of growth of the latter was higher from 18% in FY 2016 to 15% in fiscal 2017. It was largely because banks were operationally tied up in the second half of FY 2017 on account of demonetisation, the report said.

Icra’s Senior Vice President and Group Head (Financial Sector Ratings), Rohit Inamdar, said, “HFCs operating in the affordable housing space, with a total portfolio of Rs 1.2 trillion, continued to grow at a faster pace of 28% in the previous fiscal compared to the industry.”

HFCs’ growth was supported by an increase in supply due to the launch of affordable housing projects and the infrastructure status accorded to the sector. They were also helped by the improved borrower affordability supported by lower interest rates and the credit-linked subsidy scheme, Icra said.