Mumbai : Total housing credit growth moderated to 16% in the financial year 2016-17 due to lack of new project launches and as investors deferred their home purchase decisions, according to rating agency Icra.
In the financial year ended March 2016, the housing credit grew by 19%.
Overall housing credit stood at Rs 14.4 lakh crore as on March 31, 2017, against Rs 12.4 lakh crore as on March 31, 2016.
"The growth in the sector (in FY17) was impacted by a slowdown in new project launches with buyers and investors deferring their home purchase decisions in expectation of a decline in real estate prices," Icra said in a report here on Tuesday.
While the slowdown was across both housing finance companies (HFCs) and banks, the decline in the pace of growth of the latter was higher — from 18% in FY 2016 to 15% in fiscal 2017. It was largely because banks were operationally tied up in second half of FY 2017 on account of demonetisation, the report said.
"HFCs operating in the affordable housing space, with a total portfolio of Rs 1.2 lakh crore, continued to grow at a faster pace of 28% in the previous fiscal compared to the industry," Icra's senior vice president and group head (financial sector ratings), Rohit Inamdar, said.
HFCs' growth was supported by increase in supply due to launch of affordable housing projects and the infrastructure status accorded to the sector. They were also helped by the improved borrower affordability supported by lower interest rates and the credit-linked subsidy scheme, Icra said.
Traditional lenders that have historically focused on the prime segment have also started lending to this segment, the report said.
The rating agency expects affordable housing finance to continue to outpace the industry, going forward as well.
Icra expects HFCs' gross non-performing assets (NPAs) to remain range-bound between 0.9-1.3% in the current financial year.