AHMEDABAD: Gujarat’s housing finance landscape is revealing an interesting trend — while the total amount of loans being disbursed is increasing, the number of borrowers is on the decline. In FY 2025, the total housing finance in the state rose by 8.9%, reaching Rs 58,399 crore, up from Rs 53,590 crore in FY 2024. Conversely, the number of loan accounts plummeted by over 35%, from 6.9 lakh to just 4.46 lakh, according to the State Level Bankers’ Committee (SLBC) – Gujarat.
The figures indicate a shift: fewer individuals are purchasing homes, yet those who do are borrowing larger amounts. The average loan size is increasing, which may reflect rising property prices or borrowers taking on larger debts.
“The demand for new homes has clearly decreased, particularly in the affordable and mid-income sectors in recent months,” commented a senior official from SLBC-Gujarat. “The temporary spike in accounts and disbursements last fiscal year was partly due to the HDFC-HDFC Bank merger. We are currently experiencing a high-base effect alongside a real slowdown in entry-level housing demand.”
Developers in Ahmedabad confirm this trend. Although luxury housing continues to attract buyers — especially from NRIs and high-net-worth individuals seeking stable investments — mid-tier and affordable housing projects are seeing diminished interest.
This trend is consistent across Gujarat; housing finance companies are granting larger loans but to a smaller client base, illustrating a potential consolidation in demand and a widening gap between supply and affordability.
“Post-Covid, there was a surge in demand for homes as many sought to upgrade or leave rental properties. However, over the last three years, increasing land and construction costs have driven home prices considerably higher without a corresponding rise in incomes — leading to a cooling market. Currently, we are facing a liquidity crunch. While the premium segment is performing relatively well, the affordable segment continues to struggle,” noted Viral Shah, vice president of CREDAI Ahmedabad.
Kamal Vataliya, vice-president of the Ahmedabad Realtors’ Association, added that skyrocketing equity markets have also shifted investment behavior. “In the past three years, stock markets have reached new heights, causing many traditional real estate investors to redirect their funds from property down payments to equities, which has postponed their purchasing decisions.”
While the average home loan size has surged by 66% over the last five years, industry experts encourage caution in interpreting this as a sign of increased economic prosperity.
“It isn’t always the case that individuals are securing larger or superior homes. Frequently, they’re merely paying more for similar properties. Escalating property prices are compelling borrowers to stretch their financial limits,” pointed out a source from the banking sector.
