WATCH: The CEO of India’s largest home loan company says people are going for bigger homes, thanks to the lockdown

WATCH: The CEO of India’s largest home loan company says people are going for bigger homes, thanks to the lockdown
The Covid-19 induced lockdown might be bad for the rental market but many factors drove people to buy homes in the last one year. Both property prices and interest rates have become attractive. Added to that, in cities like Mumbai that had inventory, reduced stamp duty prices stirred the dormant property market.

But it’s not just that. HDFC, which gives out a fifth of the country’s home loans, says that its average size of loan has gone up to ₹30 lakh from ₹28 lakh in the last one year. At a time when property prices are falling (or stable at best) on an average, this could only mean that Indians are going in for bigger homes. “Homes are a lot more affordable now as income levels have gone up but home loan prices have either remained stagnant or come down. Interest rates are at an all-time now,” Keki Mistry, CEO of HDFC told Business Insider India.

Yet another study by Bankbazaar too said that in 2020, average home loan sizes in all went up to ₹26.4 lakhs from ₹23.8 lakhs the year before. The loans taken out by women was a tad higher at ₹31 lakhs.

‘All of us are one-room short’

The reason could be the yearning of space as families stayed locked in with more than two people working from home, on an average. “Today stars are aligned for realistic activity in work from home. All of us here are one room short of our houses. I'm staying in a four bedroom house. I want a fifth bedroom so that I can do my work properly,” said Nilesh Shah, MD of Kotak Mahindra Asset Management Company.

Shah too mirrored Mistry’s sentiment saying that real estate prices have either stagnated since 2016 or come down. “The affordability index has come down from 50 to now about 28,” said Shah. Lower prices and lower interest rates coupled with good inventory could mean property buyers are now choosing to go for larger properties which now fit into their budgets.

The falling average age of home buyers might also have had an effect on the choice for bigger homes. Younger people tend to prefer larger homes while older buyers prefer compact houses, and the young population of India might also aspire for larger homes going ahead.

“The average age of home buyers is now at around 37-38 years now. Considering that two-thirds of the population is under 40, younger people will buy homes in the next 5-10 years,” said Mistry. If the work from home trend is here to stay, it might also be possible that the demand for spacious homes is here to stay.

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