There was a time before 90’s when housing loan was too expensive in the country andwas not a popular instrument. Facts speak for themselves. The housing mortgagemarket which stood at over $6 billion in 2001 is today estimated at a mammoth $18billion. The mortgage market is mushrooming by a hefty average growth rate of 30-40% on an annual basis. A recent World Bank report clearly indicates that India is amajor evolving mortgage market in Asia. This sums up the frantic churnings in theIndian housing loan scenario which have provided that much needed shot in the armto the domestic real estate sector. The housing finance sector in India has undergoneunprecedented change over the past five years. The importance of the housing sectorin India can be judged by the estimate that for every Indian rupee (INR) invested inthe construction of houses, INR 0.78 is added to the gross domestic product of thecountry. The construction sector including housing, exhibited double digitgrowth rates over a three year period. The buoyancy in growth is likely to continue infuture and the economy may reach a growth rate of 10 per cent in the coming years.
India possesses the elements of very strong demand growth on the housing market inthe coming decades. In a very conservative (and unlikely) scenario in which theaverage household size remains constant atthe present-day level, the backlog of demand cannot be unwound and no shifts inquality take place, each year some 4.7million housing units would have to becompleted up to 2030. The total number of houses that would be required cumulativelyduring the Tenth Plan period (2002-2007) isestimated at 22.44 million dwelling units.However, this official estimate is based on the 1991 Census and unofficial estimatespeg the current housing shortage in India at 40 million units. Further, the Tenth FiveYear Plan has estimated an outlay of INR 7,263 billion to the housing sector, of whichthe contribution envisaged from public institutional sources, is only INR 4,150 billion.