India’s Housing Finance Market is Expected to Reach ₹81 Trillion by FY30

The Indian housing finance market, currently valued at ~₹33 trillion, is expected to expand at a compound annual growth rate (CAGR) of 15-16% between FY25 and FY30, reaching ₹77-81 trillion.

According to CareEdge Ratings, this growth will be driven by robust structural factors and government incentives, making housing finance an attractive asset class for lenders.

Growth in Residential Property Market

A key driver of this growth is the buoyancy in the residential property market, which has seen a remarkable 74% absolute growth since 2019, reaching 4.6 lakh units in 2024. While sales performance normalized in 2024, sustained buyer confidence continues to support market expansion.

Between 2021 and 2024, banks, including the impact of the HDFC Ltd merger, recorded a 17% CAGR in housing loans, while Housing Finance Companies (HFCs) grew at 12%. Banks maintain dominance in the housing loan market with a 74.5% market share as of March 31, 2024, benefiting from lower funding costs, extensive reach, portfolio buyouts, and co-lending arrangements.

HFCs, on the other hand, held a stable 19% market share, with their loan portfolio growing by 13.2% in FY24 to ₹9.6 trillion, aligning with CareEdge’s estimated growth range of 12-14%.

Looking Ahead

Looking ahead, CareEdge projects a 12.7% and 13.5% year-on-year growth for FY25 and FY26, respectively, supported by strong equity inflows and capital reserves. The retail segment continues to be the primary growth driver for HFCs, with more cautious expansion in the wholesale segment.

Additionally, asset quality has significantly improved, with gross non-performing assets (GNPA) declining to 2.2% as of March 31, 2024, compared to a peak of 4.3% in March 2022. This positive trend further strengthens the outlook for the housing finance sector.

Stocks Involved

Meanwhile, you can keep an eye on housing finance stocks such as Bajaj Housing Finance, LIC Housing Finance Ltd, Housing & Urban Development Corporation Ltd (HUDCO), PNB Housing Finance Ltd, and Aadhar Housing Finance Ltd, among others. The sector is expected to benefit from India’s growing housing market, driven by government initiatives, increasing urbanisation, and rising demand for home loans.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.