With the implementation of Survey of Villages Abadi and Mapping with Improvised Technology in Village Areas (SVAMITVA) scheme and work from home culture getting in vogue, there is a spurt in housing loan demand in tier 3 and 4 districts. The growth has been registered more in the female borrowers, said State Bank of India (SBI) in a research report.
The number of female housing loan borrowers increased significantly in FY22 in tier 3 and tier 4 districts. Among the top 20 districts with highest share of female borrowers in fresh home loan disbursal in FY22 (which are mostly rural), six districts are from Chhattisgarh and three from Gujarat and Haryana each, SBI said.According to the report, the housing loan portfolio of the banks grew by more than 10 per cent in FY22, with districts in tier 3 and tier 4 areas growing at a much faster rate than tier 1 and tier 2 districts post pandemic.
Further the housing prices have also shown a significant increase in the tier 3 and 4 cities than in major cities over the last year.
The combined share of tier 3 and tier 4 districts in fresh housing loan disbursement, though small, has also been growing steadily over the years. It has now grown to 36 per cent in FY22 compared to 32 per cent in FY19, the SBI said.
This rising home loan demand in rural districts can be attributed to the SVAMITVA scheme providing rural people with the right to document their residential properties which can then help them to use their property for economic purposes.
According to SBI, Haryana and Uttar Pradesh, where this scheme has already covered many villages, have more districts where home loan disbursal is increasing at a faster pace.
The Central government schemes like AMRUT, PMAY(U) and Smart Cities Mission have been pivotal in creating a holistic 360 degrees ecosystem that has seen housing demand accelerating in non-metro areas, the SBI report said.The share of ‘Housing Loans’ in ‘Bank Credit’ has increased to 14.4 per cent in June 2022 from 13.1 per cent in March 2020. Housing contributes around 50 per cent of the personal/retail loans.
The home buyers’ decisions are increasingly being shaped by significant intangibles viz. locality, facilities offered, distance to essentials/necessities (education, healthcare, financial), common as well as exclusive facilities offered and future growth prospects of the area as housing emerges as a safe and reliable investment option too (in particular, for secondary/tertiary buyers) and not just the property price alone, the report noted.
In terms of loan size, the SBI said the growth in loans in Rs 30-50 lakh and Rs 50-100 lakh brackets has been higher in tier 3 and lower districts when compared to the tier 1 districts, albeit their share in total loans is still low in these brackets (combined share of Tier 3 and 4 at 37 per cent and 25 per cent in Rs 30-50 lakh and Rs 50-100 lakh respectively).
