AHMEDABAD: After a post-pandemic housing boom, Gujarat’s home loan market is facing a marked slowdown. Disbursals of housing finance fell by 20% in the Oct-Dec quarter of financial year 2024-25, dropping from Rs 18,967 crore in the corresponding period of the last financial year to Rs 15,211 crore, according to data from the State-Level Bankers’ Committee (SLBC) – Gujarat.
Banking sector sources and real estate industry insiders attribute the dip to a number of factors including rising property prices, policy uncertainty, liquidity issues and shifting investor sentiment.
“The state govt’s recent proposal of Jantri revision in Nov 2024 also led to a significant uncertainty in the market. Even though the Reserve Bank of India cut repo rates, boosting loan products, demand for housing finance remained sluggish. The proposed Jantri revision dampened sentiments in a big way,” explained a senior official of SLBC – Gujarat, requesting anonymity.
Interestingly, soon after the Covid-19 surge, Gujarat saw a rise in home buying, largely driven by middle-class investors who capitalised on tax benefits under the old tax regime. “Many bought second homes, considering it a stable asset. However, with those benefits tapering off and new home price appreciation slowing down, the market seems to have reached a saturation point,” the official added.
Real estate sector has also faced competition from other asset classes offering quicker and higher returns, leading to a shift in investment patterns. As a result, even though banks and housing finance companies aggressively expanded their loan portfolios, actual demand remained relatively flat.
While developers had initially expected a steady influx of buyers, many prospective homeowners are now hesitant, delaying purchases or exploring other investment options.
A senior developer from CREDAI Gujarat said, “There is a weak demand in the real estate market for the last some months. Overall liquidity crisis has increased, and it has affected real estate in a big way. Stock market correction has affected the demand in real estate significantly because a large number of investors are stuck in the market. Most buyers prefer ready to move properties and only established developers with proven track record get bookings for under construction projects while new developers and projects having a large number of partners are struggling to get bookings. Ahmedabad is comparatively in a better situation compared to other cities, but suburbs of Gandhinagar have seen huge drop in demand.”
With no immediate stimulus in sight, the housing finance sector is expected to tread cautiously.
Source Homevior.in
