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Box 4.2: Housing Loan Growth & GDP Growth
Housing loan growth and GDP growth are related with the correlation coefficient of
0.62 per cent. The COVID-19 pandemic has rocked the economy and GDP contracted by
24.4 per cent in Q1FY21 from the growth of 4 per cent in FY20. For the same period, the
outstanding housing loan growth (SCBs & HFCs) reveals the similar pattern of growth
(i.e., growth rate of 2.53 per cent in FY 20 declined to 0.19 per cent in Q1FY21). Similarly,
when the economy revived with 1.6 per cent GDP growth in Q4FY21, housing segment
(loan outstanding) growth also improved at 4.35 per cent growth in Q4FY21.
A Research study on Residential Housing Demand in India, conducted by NIBM & NHB,
reveals that housing loan growth is dependent upon the GDP growth rate and the impact
is short run by applying Granger Causality Test. If GDP growth slows down, there is also
a deceleration in housing loan growth rate also. This is well evidenced with the present
scenario of decline in GDP growth and housing loan growth due to the pandemic. (Graph
4.2).
Graph: 4.2: Housing Loan Growth & GDP Growth
Source: RBI, NHB, CSO
The GDP growth estimate for FY22 stood at 10.5 per cent (RBI), as the economic recovery
has gained momentum after the lifting of the localised lockdowns imposed in the
aftermath of the second wave. Hence the revival in housing loan growth is anticipated in
FY22 from the present level of 12.32 per cent by Schedule Commercial Banks and 8.13 per
cent from Housing Finance Companies.
Annual Report 2020-21 | 257
Housing loan growth and GDP growth are related with the correlation coefficient of
0.62 per cent. The COVID-19 pandemic has rocked the economy and GDP contracted by
24.4 per cent in Q1FY21 from the growth of 4 per cent in FY20. For the same period, the
outstanding housing loan growth (SCBs & HFCs) reveals the similar pattern of growth
(i.e., growth rate of 2.53 per cent in FY 20 declined to 0.19 per cent in Q1FY21). Similarly,
when the economy revived with 1.6 per cent GDP growth in Q4FY21, housing segment
(loan outstanding) growth also improved at 4.35 per cent growth in Q4FY21.
A Research study on Residential Housing Demand in India, conducted by NIBM & NHB,
reveals that housing loan growth is dependent upon the GDP growth rate and the impact
is short run by applying Granger Causality Test. If GDP growth slows down, there is also
a deceleration in housing loan growth rate also. This is well evidenced with the present
scenario of decline in GDP growth and housing loan growth due to the pandemic. (Graph
4.2).
Graph: 4.2: Housing Loan Growth & GDP Growth
Source: RBI, NHB, CSO
The GDP growth estimate for FY22 stood at 10.5 per cent (RBI), as the economic recovery
has gained momentum after the lifting of the localised lockdowns imposed in the
aftermath of the second wave. Hence the revival in housing loan growth is anticipated in
FY22 from the present level of 12.32 per cent by Schedule Commercial Banks and 8.13 per
cent from Housing Finance Companies.
Annual Report 2020-21 | 257
