Low-cost Housing to Drive Growth
By Keki Mistry Vice Chairman & CEO, HDFC Ltd
The onset of the pandemic had a devastating effect on the economy last year. The national lockdown, uncertainty over vaccine development and dealing with a completely unknown event which had no precedent in the modern era led to an understandable pessimism about what the future holds for us. From an economic perspective, I was confident we would begin to recover as lockdown measures are eased. India’s macroeconomic fundamentals are sound and our inherent demand cannot be questioned.
As regards housing loans, there was a general consensus that the recovery would be gradual, but it was much faster than anticipated. At HDFC, our year-todate retail disbursements not only continued to improve month-on -month, but more importantly, from September onwards, there was consistent growth compared to the same month in the previous year. In fact, in the March quarter, we saw 60 per cent growth in individual disbursements. I cannot remember a full quarter of such sharp growth in HDFC’s history.
Whilst recurring waves may cause a momentary pause in offtake of housing loans, the effect will always be significantly less severe than during the first wave. Importantly, the recent lockdowns have been localised, with micro containment zones, and not as strict as last year, with many sectors allowed to operate. If last September to March is any indication, then one can be reasonably confident that the demand for housing is more buoyant than ever. With the vaccination drive gathering pace, I can only see an upward momentum for the housing sector.
Within the housing and real estate sector, it is affordable housing which has been the driving force. The salaried and the middle-class are capitalising on the opportunities which are being offered. Indeed, it is a ‘Goldilocks Zone’ for the customer as the confluence of low interest rates (I really don’t think interest rates in India are likely get lower than this), soft or stable property