Despite real estate witnessing boom in last couple of years with 90 per cent of home loans borrowers being the first timers, home loans Gross Domestic Product (GDP) ratio in India continues to be at meagre five per cent as against 50 per cent in US and UK, reveals a study.

According to Assocham study since buying a home requires huge investment, especially for the first time buyers, higher home loan GDP ratio is necessary.

As such, high interest rates coupled with soaring property prices have only impacted the affordability of buyers. Demand, however, continues to persist and will become stronger and more intense in near future, it forecasts.
As per an estimate, India has a housing shortage of about 19.4 million units of which 6.7 million is estimated for urban India and  12.7 million units in rural India. However, with rising income, swelling middle class and rapid urbanisation, the demand is set to go up, estimated that additional 45 million units would be required for both rural and urban areas by 2012.

Forecasts
India’s per capita income has doubled over the past 20 years. With population growth of 1.6 per cent and GDP growth of nine per cent per annum, the per capita income is expected to quadruple by  2020.

The average real income of urban India and rural India is likely to grow by 5.7 per cent and 3.6 per cent respectively by 2025. Moreover, India’s middle class is expected to grow manifold. All these estimates work out to make a strong case for higher home loan GDP ratio so that India and its population is able to keep a pace for meeting the demand for housing units, the study suggests.