Indian Housing Finance Industry is facing several tailwinds due to a long runway of growth that is available in front of it. The current size of the Indian Housing Finance market is around USD 300 Billion. Banks have a major junk of market share out of the above-mentioned size. The Banks market share stands at 67% (approx. USD 201 Billion) while Housing Finance Companies and NBFCs own the remaining 33% share (approx. USD 99 Billion).
In the case of the Affordable Housing Finance which is seeing major growth on account of various government initiatives. Out of the total market of Affordable housing, Housing Finance companies Have a massive market share of more than 40%.
One interesting thing that pans out is that the top 5 lenders (out of both banks and Housing Finance Companies) together account for almost 80% of the Housing Finance Market.
When we narrow down into the Housing Finance Companies only, the behemoth HDFC Limited accounts nearly for 50% of the Market Share. With the recent development of the merger between HDFC LTD and HDFC Bank where the synergy benefits of the resultant company will help to gain a significant market share. Post the merger, the market share of the remaining Housing Finance Companies is expected to fall to 20-25% of the Housing Finance Market in India.
What lies ahead for the Housing Finance Market?
The Housing Finance Market is expected to grow at a CAGR of 15% in the next 5 Years. The result of the same will be that the total expected Housing Finance Market will double and will stand at USD 600 Billion. The FY23 credit growth outlook for Housing Finance Companies is around 9-11%.
On account of various schemes and government boosts the Affordable Housing Finance Companies are expected to grow at a much higher pace. The companies may grow at a rate of 15% CAGR in the upcoming 5 Years.
Sectoral Tailwinds and Growth Drivers for the Housing Finance Market:
There is a significant lower penetration in the Mortgage Market which will see a gradual increase in the upcoming years.
The Current Mortgage to GDP Penetration In India stands at 11%. In the upcoming 5 years, where the GDP of the Indian Market is expected to touch 5 Trillion USD, the resultant Housing Finance Market after a 9-11% CAGR will be around USD 600 Billion. The Mortgage to GDP Penetration after such strong growth will still be at 13% vs around 20-30% when measured against the comparable Asian Countries.