Trends and Progress of Housing in India 2024: A Comprehensive Analysis

New Delhi: The National Housing Bank (NHB) has released its latest Trends and Progress of Housing in India 2024 report, providing a comprehensive analysis of the current state of the housing sector in India. The report delves into key financial trends, the distribution of housing loans, government initiatives, challenges in the sector, and the growing adoption of green buildings. By offering valuable insights, it serves as a crucial resource for policymakers, financial institutions, and industry stakeholders involved in housing development.

Key Findings of the Report

Housing Loan Market Share

The report highlights that banks continue to dominate the housing finance market, holding 81% of the total housing loan share, while Housing Finance Companies (HFCs) account for the remaining 19%. This underscores the significant role played by traditional banking institutions in financing homeownership across India.

The distribution of housing loans among different income groups, as of September 2024, is as follows:

• Middle-Income Group (MIG): 44%
• Economically Weaker Sections (EWS) & Low-Income Groups (LIG): 39%
• High-Income Group (HIG): 17%

This data highlights the growing accessibility of housing finance to middle and low-income groups, a crucial factor in promoting inclusive housing development.

Housing Loans as a Percentage of GDP

One of the significant trends observed in the report is the rise in housing loans as a percentage of GDP. The share has increased from 6.60% in 2011-12 to 11.29% in 2023-24, reflecting improved access to housing finance and the growing importance of the real estate sector in India’s economic growth.

Green Building Adoption

Sustainability remains a major concern in the housing sector. The report reveals that only 5% of buildings in India qualify as ‘green buildings.’ This highlights a major gap in the adoption of environmentally sustainable practices in construction. Addressing this issue is critical, given the increasing climate risks and the need for energy-efficient housing.

Government Initiatives Driving Housing Sector Growth

The Indian government has introduced several initiatives aimed at improving housing accessibility and affordability. Key programs highlighted in the report include:

• Pradhan Mantri Awas Yojana-Gramin (PMAY-G): Focuses on providing affordable housing solutions in rural areas, ensuring access to basic amenities.
• Pradhan Mantri Awas Yojana-Urban (PMAY-U): Supports affordable housing projects in urban regions, particularly benefiting low and middle-income groups.
• Urban Infrastructure Development Fund (UIDF): Strengthens infrastructure financing to facilitate the construction of affordable housing in urban centers.
• Affordable Rental Housing Complexes (ARHCs): Aims to provide secure and affordable rental housing solutions for migrant workers and economically disadvantaged urban populations.

These initiatives play a vital role in addressing housing shortages and making homeownership more accessible to a larger segment of the population.

Challenges in the Housing Sector

Regional Disparities in Housing Finance

The report identifies significant disparities in the distribution of housing loans across different regions of India. The percentage of total housing loans disbursed by region is as follows:

• Southern States: 35%
• Western States: 30%
• Northern States: 28%
• Eastern States: 5.4%
• North-Eastern States: 0.68%

These figures suggest that while the southern and western regions have strong access to housing finance, the eastern and northeastern states face considerable challenges in securing funding for housing development.

Climate Risks & Infrastructure Challenges

With the increasing frequency of climate-related disasters, such as floods and heatwaves, the report emphasizes the growing need for climate-resilient housing. Infrastructure constraints, particularly in urban areas, pose additional challenges in creating sustainable and livable housing solutions.

Issues in Green Housing Development

The adoption of green buildings faces multiple hurdles, including:

• Limited availability of certification bodies.
• Absence of a standardized certification framework for green housing.
• High costs associated with eco-friendly construction materials.

To overcome these challenges, the report suggests the need for policy reforms, financial incentives, and public-private partnerships to encourage sustainable housing practices.

Opportunities for Growth in the Housing Sector

Despite the challenges, the housing sector presents several growth opportunities:

Technological Advancements

• AI, data analytics, and predictive modeling are being increasingly utilized to enhance housing finance and risk assessment.
• 3D printing technology offers the potential to reduce construction costs and accelerate project completion.
• Digitization of land records improves transparency and minimizes legal disputes in real estate transactions.

Increased Liquidity & Investment

• Real Estate Investment Trusts (REITs) provide small investors with opportunities to participate in large-scale housing projects, increasing liquidity in the market.
• Innovative financial instruments are helping enhance credit availability for housing projects.

Budget Push for 2025-26

The upcoming budget is expected to introduce new measures, including:

• Urban Challenge Fund: Aimed at boosting urban housing development and infrastructure.
• National Geospatial Mission: Focused on improving planning and development in the housing sector through advanced mapping technologies.

Role of the National Housing Bank (NHB)

Overview

• Established: 1988 under the National Housing Bank Act, 1987.
• Objective: To regulate, promote, and develop the housing finance market in India.
• Ownership: Fully owned by the Government of India.
• Authorised Capital: ₹1,450 crore (fully subscribed by the Government of India).

Key Functions

• Enhances financial inclusion by facilitating access to housing finance, especially for middle and low-income groups.
• Expands credit facilities to underdeveloped and rural regions.
• Supports innovative housing finance solutions, including microfinance models for housing.
• Supervises Housing Finance Companies (HFCs); however, key regulatory powers, including HFC registration, have been transferred to the Reserve Bank of India (RBI).

Conclusion

The Trends and Progress of Housing in India 2024 report underscores the notable advancements in the housing sector, driven by increased access to housing finance and government interventions. However, it also identifies critical challenges, such as regional disparities in loan distribution, climate risks, and slow adoption of green buildings. Moving forward, leveraging technological innovations, enhancing liquidity, and fostering sustainable housing practices will be crucial in bridging existing gaps and ensuring long-term growth in India’s housing sector. With continued government support and strategic reforms, the sector is poised to play a significant role in India’s economic development and urban transformation.

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