Mumbai: The apparent slowdown in the economy and burgeoning real estate prices over the last 4-5 years has put the housing market and growth in home loans in a downward swing.
According to Reserve Bank of India (RBI) data, the exposure of scheduled commercial banks (SCB) to housing loan as a percentage of their total advances is on a steady decline. It has dropped from a high of 12.9 per cent in March 2006 to an eight-year low of 8.9 per cent in March 2011. The RBI data shows that between March 1999 and March 2006, the share of housing loan (credit limit of more than Rs 2 lakh) in the total bank credit rose from 1.8 per cent to 12.9 per cent. Since 2006, housing loan has been on a decline, falling to 9.7 per cent in March 2010.
In absolute terms, the growth of total credit outstanding to the housing sector has also slowed. While the net addition to the total outstanding credit to housing loans rose by Rs 179,857 crore (at a CAGR of 39 per cent) in the four-year period between 2003-04 and 2006-07, the net credit addition in the period between 2007-08 and 2010-11 stood by only Rs 117,008 crore (at a CAGR of 11.7 per cent). The net credit addition, in absolute terms, has gone down over last few years as a result of the slowdown in the housing sector.
The trend is likely to continue in 2011-12. According to the data collated from the Department of Registration and Stamps, registrations of new homes in Mumbai in 2011-12 fell by 18.5 per cent from 76,410 in 2010-11 to 62,261 in 2011-12.
“While the slowdown in economy had its impact, high inflation ate into household budget and at the same time real estate prices went up sharply, leading to a slowdown in demand,” said Brinda Jagirdar, GM and head of economic research at State Bank of India. “RBI too played some role by tightening the prudential norms and enhancing the provisioning requirement so as to prevent a housing bubble.”
Source:
www.financialexpress.com
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