Affordable Housing Will Be Rs 6 Lakh Crore Opportunity By 2022, Says India Ratings 

Growing demand for affordable housing will provide a major boost to the affordable housing finance segment over the next five years, according to an India Ratings & Research report.

The ratings agency sees the share of the affordable housing finance segment within housing finance rise to 37 percent by financial year 2021-22 compared to 26 percent currently, supported by expected equity flows worth Rs 20,000 crore in this segment.

India Ratings sees demand to rose four times the existing stock to 250 lakh homes during this period. The higher demand, the agency says, will be led by five key factors including the government’s financial and policy thrust, regulatory support including the introduction of the Real Estate Act, rising urbanisation, increasing nuclearisation of families and increasing affordability.

"Currently, the affordable housing finance segment is around Rs 1.5 lakh crore. We expect these factors to help it grow at 31.5 percent CAGR over the next five, making it a Rs 6 lakh crore opportunity," Harshal Patkar, senior analyst with India Ratings told BloombergQuint.

India Ratings expects “new age and regional” housing finance companies to grow over 25 percent backed by private equity funding, primary market offerings, support from banks and the government’s policy thrust.

Existing large housing finance companies as well as small finance banks are likely to focus increasingly on allocating equity in this space, the agency says. Banks have also increased allocation with a relatively higher tenure, witnessing a 1.5 times rise over FY15 and FY17, it adds.