Housing Credit Sees K-Shaped Recovery Post-Pandemic
The housing sector has experienced a k-shaped recovery, with high-cost housing credit maintaining robust growth while low-cost housing credit struggles. The RBI rate cut is expected to boost affordable housing credit.
Housing CreditKshaped RecoveryReal EstateAffordable HousingLuxury HousingReal Estate NewsJun 07, 2025
Housing credit in general has grown by 15.3 percent in 2024, with premium and luxury housing accounting for most of this growth. High-cost housing loans grew at 21 percent, whereas priority housing, which is also lower-cost housing, is struggling to pick up. In 2024, it grew by only 0.7 percent, as per the data from Capitalmind.
From over 25 percent in July 2020, credit growth in low-cost housing has been declining since the pandemic. The sector even experienced negative growth during July-August of the previous year. On the other hand, high-cost housing credit has been growing between 20 to 30 percent ever since the pandemic.
The general economic recovery after the pandemic has been k-shaped, with the rich getting richer and the poor getting poorer. Luxury housing sales share rose from 7 percent in 2019 to 26 percent in 2024. Affordable housing demand, on the other hand, saw its share shrinking from 40 percent in the second half of 2020 to 21 percent in the second half of 2023.
Among the affluent, the work-from-home concept has seen people opting for larger houses. The average size of houses has been increasing in key cities. According to Anarock Group, the average flat sizes in fresh supply in the top seven cities grew by 7 percent from around 1,150 square feet in 2018 to 1,225 square feet in Q1 2023.
The stamp duty cuts in Maharashtra and Karnataka also led to several large luxury property deals in Mumbai, Pune, and Bangalore. These reductions have been a significant factor in boosting the luxury housing market in these cities.
According to CREDAI, the Reserve Bank of India (RBI) rate cut will improve consumer sentiment, immensely benefiting mid-income and affordable housing segments, which have been struggling in the last few years. This move is expected to provide a much-needed boost to the lower-cost housing market, helping to balance the k-shaped recovery observed in the housing sector.
Frequently Asked Questions
What is a k-shaped recovery in the housing sector?
A k-shaped recovery refers to a situation where different segments of the market recover at different rates. In the housing sector, this means that high-cost housing credit has seen robust growth, while low-cost housing credit has struggled.
How has the pandemic affected housing credit growth?
The pandemic has led to a decline in low-cost housing credit growth, with some segments even experiencing negative growth. High-cost housing credit, however, has maintained a growth rate above 20 percent since the pandemic.
What is the current growth rate of housing credit in 2024?
Housing credit in general has grown by 15.3 percent in 2024, with premium and luxury housing segments driving most of this growth.
How has the work-from-home concept impacted the housing market?
The work-from-home concept has led to an increase in demand for larger houses among the affluent, contributing to the growth in the average size of houses in key cities.
What is the expected impact of the RBI rate cut on the housing market?
The RBI rate cut is expected to improve consumer sentiment and benefit mid-income and affordable housing segments, which have been struggling in recent years.
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