India’s middle-income group (MIG) has solidified its position as the backbone of the country’s home loan market, accounting for 44 per cent of outstanding individual housing loans as of September 2024, according to the National Housing Bank’s (NHB) latest report, ‘Trend and Progress of Housing in India 2024’
With individual housing loans surging 14 percent year-on-year to ₹33.53 lakh crore as of end September 30,2024, the data reflects the increasing aspiration for homeownership, rapid urbanization, and the role of supportive government policies in fueling this demand.
While housing finance companies (HFCs) recorded a 13.93 percent year-on-year growth in loan disbursements as of September 2024, public sector banks led with a 17.42 percent rise, followed by private banks at 10.42 percent. This robust expansion underscores the crucial role of lending institutions in meeting India’s growing housing needs.
Middle-Income Segment at the Forefront
The NHB report highlights how the MIG segment remains the dominant force in India’s housing market, followed closely by the economically weaker section (EWS) and low-income group (LIG), which collectively accounted for 39 percent of outstanding individual home loans. Meanwhile, the high-income group (HIG) represented 17 percent of total outstanding home loans.
Experts attribute the rise in MIG housing demand to increasing disposable incomes, urban expansion, and government initiatives such as subsidies under the Pradhan Mantri Awas Yojana (PMAY). The data also underscores the significant role affordable housing continues to play in India’s real estate sector.
Housing Loans’ Rising Share in GDP
The NHB report further highlights the expanding footprint of housing loans in India’s economy. The ratio of housing loans to GDP has climbed steadily from 3.2 percent in 2001-02 to 6.6 percent in 2011-12 and further to 11.25 percent in FY 2023-24.
During the first half of FY 2024-25, individual housing loan disbursements stood at ₹4.10 lakh crore, surpassing the ₹3.99 lakh crore disbursed in the same period of the previous year. In FY 2023-24, total disbursements reached ₹9.07 lakh crore, indicating sustained momentum in home loan uptake.
Regional Disparities in Home Loan Disbursements
The report also highlights regional variations in home loan distribution. Southern states accounted for the largest share of disbursements at 35.02 per cent, followed by Western (30.14 per cent) and Northern states (28.73 per cent). The Eastern (including North East) and Northeastern states lagged, with 6.10 percent and 0.68 percent of total disbursements, respectively.
The NHB identifies these regional disparities and climate-related vulnerabilities as key challenges for the housing sector. It emphasizes the need for targeted policy measures to bridge the credit gap and address housing accessibility across different geographies.
Future Outlook: Strong Growth on the Horizon
The report outlines a positive outlook for India’s housing sector, driven by key government initiatives, urbanization, and technological advancements in construction. The upcoming PMAY 2.0, digitization of land records, and transit-oriented development projects are expected to further boost home loan growth.
The NHB report also covers major government schemes, including PMAY (Urban and Rural), the Urban Infrastructure Development Fund (UIDF), and Affordable Rental Housing Complexes (ARHC), highlighting their impact on housing accessibility and financing.
With a strong policy framework and increasing demand from the middle-income segment, India’s housing market is poised for sustained growth, reinforcing its role as a key driver of economic development, economy watchers said.