Housing finance cos expect to regain pre-Covid momentum

Mumbai, Sep 20: Housing Finance Companies (HFCs) went through a difficult period in the first half of financial year 2021 due to the factors caused by Covid pandemic leading to a bearish phase in the real estate sector and uncertainty in the economic conditions.  As a result, the industry witnessed slowdown in disbursement and moderation in portfolio growth. The outbreak of Covid-19 further impacted the collections and added to the asset quality woes. However, turnaround was witnessed in the second half of the financial year as normalcy got restored gradually. With activities resuming post September, the sales picked up and HFCs started posting healthy disbursals.  The best quarter was January to March 2021 where robust disbursements was seen in excess of pre-pandemic levels.  Among other factors that lead to this buoyancy were the concessions extended by ways of reduction in stamp duty, lower interest regime, shift in customer preferences towards home ownership and availability of residential units at attractive price points coupled with lucrative offers from developers. Pankaj Kapoor, Founder and Managing Director at Liases Foras believed, “Post the first wave of Covid, the residential housing market in India has shown a remarkable recovery. While the recovery after the first wave was driven by the concession in stamp duty, lower interest rates, discounts, and developers' schemes, the momentum continued even during the second wave suggesting a solid undercurrent of the end-users demand.  Our data shows the sales in the first half of 2021 (HI CY 21) clocked 165600 units, 25% higher than H2 CY 20 and 30% higher than HI CY 20. That too, despite no stamp duty concession being available at present. The prevalent inventory suggests that the market will continue to remain efficient, and sales will continue growing.” The good run that continued were halted again by the second wave in April and May this year and the subsequent disruptions caused by localized lockdowns, restrictive movements etc.  Along with disbursements collections were also hampered casting gloom once again.  Nevertheless, the impact remains limited. Y Viswanatha Gowd, MD & CEO of LIC Housing Finance Ltd said, “The impact on our collections is less due to prevailing online collection practices that were put in place immediately in the first wave which got reinforced over the past one year.   Moreover, all the EMI collections are either through salary deduction or NACH mandate which gets auto debited on the due date opted by borrowers which enables a seamless online payment mode to borrowers without visiting our offices.   So overall, the relative situation so far in FY2022 is comparatively better than the previous year.”   The optimism going forward is not without reason as the residential real estate segment bounced back impressively in Q4 FY2021 from the lowest levels witnessed in Q1 of last year.   Many reputed builders including the listed ones have reported better sales.   As per a recent Knight Frank India report, close to one lakh residential units were sold in the first half of 2021 (H1 CY2021) and there were almost 1.03 lakh new launches during this period. Developers also reported lesser number of unsold inventory and price erosion too remained limited (1-2%) on Y-o-Y basis. Sunil Mishra,  MD & CEO TRESPECT India said, “The outbreak of the second wave has had a much milder impact on residential sales compared to the first wave. Work from home requirements and also online schooling have necessitated the need for bigger/better housing.”