D. Lakshminarayanan, MD Sundaram Home Finance
First-time home buyers are increasingly younger in age than earlier, said D. Lakshminarayanan, MD, Sundaram Home Finance.
“The proportion of homebuyers aged under 35 is going up as a proportion of the whole,” Mr. Lakshminarayanan said in an interview.
The other continuing trend was of a set of people buying second homes, “which, in a way, shows affluence in society and the rise in the standard of living,” he added.
“If a couple has two children, parents tend to want to leave behind at least one residence for each offspring. It’s an emotional decision, not so much one driven by arithmetic alone.”
Asked if the demand for homes and loans was not part of an extended playing out of pent-up demand following pandemic restrictions, he said, “A spike over a short period may have been attributed to pent-up demand, but not the numbers we have been seeing for over a year.”
“Calendar 2022 was a fantastic one for real estate as well as for home finance,” he said. “On the back of two pandemic years, and given that the period preceding that was also difficult for the real estate space, one could not have asked for more. In fact, we are pushing past pre-pandemic levels – so, genuine growth is happening. The current recovery has been driven by real end-users, not investors. For that reason, this is far more sustainable.”
The company’s focus on small towns had also increased in recent times.
“Metros and tier 1 cities have become crowded. We had to look elsewhere and tier 2 and 3 towns presented growth opportunities. As a group we understood that market and hence it was a logical extension for us to expand into those markets. The business opportunity in small markets is quite large as is the amount of wealth of the people in these geographies.”
In the past quarter, the company entered the small-business loans segment. On the new line of revenue for the company, he said, “We forayed into small business loans segment in October and are looking at around ₹10 crore disbursements by March. This segment requires a far greater understanding and study of the customer than loans to the salaried class. We believe that this has potential to grow into about 10% of our overall business in 3-5 years. At the moment, it is more in a start-up phase.”
Mr. Lakshminarayanan also pointed to the infrastructure push by the government as a lead indicator for the housing business in minor centres. “Infra is likely to grow in smaller towns and consequently housing demand can only improve further. Real estate demand will continue for the next 3-5 years. Proof of this is the disbursements growth in 2022 coming off a pandemic year. I do believe that this is a long-term positive story. The demography too plays to our advantage.” The company had witnessed an 18% growth in disbursements to ₹940 crore for the second quarter ended September.
Queried as to what he would like from the upcoming Budget for the home finance business, he said, “We would like the threshold for tax deduction on home loans to be increased from ₹2 lakh to ₹5 lakh”.
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