The pinnacle of India’s largest personal mortgage supplier has forecast that India’s youth bulge will propel demand for housing for years, as rising incomes on the planet’s most populous nation have made properties extra inexpensive.

“What offers me confidence that the expansion will stay robust for quite a few years is the truth that India has a younger inhabitants,” mentioned Keki Mistry, chief government of Housing Growth Finance Company (HDFC), in an interview with the Monetary Instances on the firm’s Mumbai headquarters.

Nicely over half of India’s inhabitants is aged beneath 30, whereas the common first-time homebuyer is aged 37-38, mentioned Mistry.

“All these youthful folks will get to an age the place they may essentially want to purchase a house,” added the four-decade trade veteran. “To my thoughts, there might be a structural demand for housing and due to this fact demand for housing financing.”

Mistry’s feedback come because the 68-year-old readies for partial retirement right into a non-executive position, as HDFC prepares to merge with subsidiary HDFC Financial institution, India’s largest personal lender, in what might be India’s largest ever company mixture. The merger is scheduled to finish in July.

As India’s economic system has recovered from the pandemic and its inhabitants grown to turn into the world’s largest this yr, customers have borrowed sooner than firms to be able to purchase items from homes to vehicles or fund schooling.

Throughout March banks elevated the quantity of private loans they wrote by 20.6 per cent yr on yr, in contrast with 12.6 per cent in the identical month a yr earlier.

The Reserve Financial institution of India, which publishes the info, mentioned the leap was “primarily pushed by ‘housing loans’”, whereas lending to trade grew at a extra sluggish 5.7 per cent in March, slowing from a 7.5 per cent enhance the earlier yr.

Mistry mentioned he was unconcerned concerning the fast development in unsecured lending. “Even in unsecured loans there’s not been any actual credit score subject which has ever cropped up,” he mentioned, arguing that “laws in India are extraordinarily tight”.

Sturdy house-buying spurred a 21 per cent leap in HDFC’s web income for the yr ending this March, to Rs460bn (about $5.6bn), as improvement ramps up in India’s smaller cities and cities.

India nonetheless has one of many world’s lowest charges of housing loans to gross home product, though that ratio has virtually doubled each decade this century — from 3.2 per cent housing loans to GDP in 2001-2, to 10.6 per cent in 2021-22 — in accordance with the Nationwide Housing Financial institution.

Nonetheless, rising incomes, comparatively stagnant housing costs and authorities incentives are making house- or apartment-buying a extra real looking prospect for a lot of center class customers. “Affordability right this moment is so much higher than what it traditionally has been,” mentioned Mistry.

In the meantime, rising rates of interest, which have harm housing demand in different economies, have barely registered in India the place mortgage charges have traditionally been excessive.

“If 1 per cent goes as much as 4 or 5 per cent that’s an enormous enhance,” mentioned Mistry. “In India, rates of interest had been all the time excessive, so when the charges go up . . . the share enhance within the rate of interest is just not that important.”

Mortgage rates of interest vary between 9 and 14 per cent in India, in accordance with non-bank lender Bajaj Finserv. Within the UK, by comparability, the common variable mortgage charge stood at 7.4 per cent in April, in accordance with authorities statistics.

Mistry, who has labored for HDFC since 1981, mentioned customers had additionally turn into more and more comfy with taking loans: “The worry of borrowing cash, which was there 50 years in the past, is just not there right this moment.”