.............47 Research Notes - Housing
India Ratings and Research (Ind-Ra) believes affordable housing finance (largely for loan ticket size up to `1.5 million) will become a large segment for housing finance companies (HFCs) over FY18-FY22, with the estimated share to increase to around 37% in FY22 (FY17: 26%).
Ind-Ra anticipates a demand for 25 million homes (4x of the entire current housing finance stock) over FY17-FY22 in the Medium Income Group (MIG) and Lower Income Group (LIG) categories. It expects the sector to attract over `200 billion of equity inflows over FY17-FY22 which would support growth.
A combination of factors such as government financial and policy thrust, regulatory support, rising urbanization, increasing nuclearization of families and increasing affordability is converting latent demand into a commercially lucrative business opportunity, according to special report authored by Ind-Ra’s analysts led by Harshal Patkar. The total assets under management in the affordable housing segment at present is approximately `1.5 trillion and it is likely to be up four times to `6 trillion by FY22.
The interest subsidy could be as much as one-fourth of the total funding for a typical ticket size, thereby increasing the affordability for the borrower and lowering the effective interest rate. A large size of the incremental customer sets could be introduced to formal credit for the first time. The Jan Dhan-Aadhaar-mobile trinity could be an enabler in this step.