Housing Finance – Encouraging prospects - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Housing Finance – Encouraging prospects

Nov 10, 2000

The economy downturn in India in the last two years resulted in a slow down in construction activity, in turn affecting the prospects of the housing finance industry. The key sectors of the economy including cement, aluminium, steel and auto were impacted adversely.However, the outlook began to improve beginning financial year 2000. The economic performance has been much better than anticipated mainly due to a sharp rebound in the industrial and services sectors. But the acceleration in economic activity during financial year 2001 proved to be a short lived. The GDP growth rate slipped to 5.8% during the period April – June 2000 from 6.9% in the corresponding previous quarter. The slow down in industry growth has been witnessed across all the key sectors. The most recent concern however, has been a slowdown in demand for commodities like cement, in the states hit by drought.

The housing finance industry has been in a slump in recent times with there being a low demand from builders and investors. However, the outlook for the housing finance sector seems very exciting going by the following:

  • Government has announced a number of concessions in the Union Budget for 2000 for the housing sector.
  • The real estate prices have declined, making the investment in real estate very economical at the moment.
  • Houses for the middle-income group have become more affordable in the last five years. Earlier, houses would cost an average 20 years of salary, now it has come down to just 8-10 years' salary.
  • Interest rates for housing loans have gone down from an average 17-18% in 1994 to 13-14% now, thereby making the loans cheaper.
  • Infrastructure status given to housing finance companies will pave the way for large housing projects in future.
  • Government has announced an action plan to construct 10 million houses every year.

The above-mentioned developments are expected to result in increased activity in the housing construction but at a slower pace.

HDFC is the market leader in the housing finance industry and commands a share in the vicinity of 45% of the total funds that are disbursed by all majors. The company's large depositor base gives it an edge over its competitors. On the financial front also the company has fared consistently over the years. HDFC with its near monopolistic position, strong brand image and high penetration will stand to benefit in this scenario. But increasing competition from SBI, ICICI and smaller housing finance companies could hurt HDFC’s dominant market share in the near term.

Equitymaster requests your view! Post a comment on "Housing Finance – Encouraging prospects". Click here!

  

More Views on News

The Affordable Housing Boom Could Boost these 5 Stocks for Years to Come... (Views On News)

Oct 20, 2021

With record low interest rates and numerous discounts and schemes by real estate companies, the affordable housing boom is here to stay.

5 Indian Companies with Enviable Stock Portfolios (Views On News)

Oct 2, 2021

Here's how you can invest in multiple companies without really investing in multiple companies.

7 Stocks With Highest FII Shareholding (Views On News)

Aug 26, 2021

Come hell or high water, these are top Indian stocks which FIIs never leave.

6 Debt Free Penny Stocks with Solid Growth (Views On News)

Oct 2, 2021

Penny stocks which have a decent balance sheet, low or zero debt and a track record for paying consistent dividend fare much better against their peers.

3 Stocks Riding the Fintech Megatrend in India (Views On News)

Sep 29, 2021

India's fintech industry, valued at US$31 bn, is projected to grow to US$84 bn by 2025.

More Views on News

Most Popular

These 5 Penny Stocks are Held by Rakesh Jhunjhunwala. Worth a Look? (Views On News)

Jan 18, 2022

Rakesh Jhunjhunwala is holding these penny stocks in his portfolio for several years now.

Time to Buy Energy Stocks (Fast Profits Daily)

Jan 14, 2022

Energy is a sector that looks set to take off. It's time to get in.

Tech Mahindra's CTC Acquisition: Too Expensive? (Views On News)

Jan 18, 2022

Tech Mahindra's acquisition of European IT-company fails to excite investors.

5 Hidden Tata Group Companies to Add to Your Watchlist (Views On News)

Jan 18, 2022

Here's all you need to know about these five Tata group stocks that aren't as popular as the others.

Insiders are Buying into these 6 Stocks Aggressively. More Details here... (Views On News)

Jan 19, 2022

While promoter holding is an important parameter, it should not be the sole reason for buying a stock.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

HDFC SHARE PRICE


Jan 27, 2022 (Close)

TRACK HDFC

COMPARE HDFC WITH

MARKET STATS