Economic Survey: Deeper financialisation drives India’s housing demand as loans hit Rs 37 lakh cr

India’s housing market is becoming increasingly financialised, with outstanding individual housing loans more than tripling over the past decade, to over Rs 37 lakh crore in March 2025 from around Rs 10 lakh crore in March 2015, according to the Economic Survey 2025-26.

Housing loans now account for over 11% of GDP, up from 8% a decade ago, reflecting the growing role of formal credit in driving housing demand.

The survey notes that the ‘real estate and ownership of dwellings’ sector has contributed around 7% to annual gross value added (GVA) on average over the past ten years, underscoring its importance in services-led growth and its strong linkages with construction and financial services.


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Policy reforms have supported greater formalisation of the sector. Key measures include the Real Estate (Regulation and Development) Act, 2016 (RERA), the rollout of GST, and the Housing for All mission.

Demand-side measures such as interest subvention under the Pradhan Mantri Awas Yojana (Urban), the Affordable Housing Fund, lower interest rates, and streamlined housing credit processes have strengthened access to finance, particularly for first-time and middle-income homebuyers.

Urban initiatives such as the Smart Cities Mission and the Urban Infrastructure Development Fund (UIDF) have further boosted housing demand in tier 2 and tier 3 cities by improving infrastructure, connectivity, and livability, broadening the geographic base of residential development beyond major metropolitan centres.

Backed by these reforms, the sector entered a sustained upcycle from September 2021, post-COVID, with improved sales supported by higher household savings being channelled into physical assets, including housing.

The momentum has continued in recent quarters, aided by favourable affordability conditions and easing inflation. Housing sales volumes, on average, have remained higher than levels recorded in 2021-22-2023-24, indicating sustained end-user demand.

The survey concludes that the combination of regulatory reforms, improved access to housing finance, and targeted urban infrastructure initiatives has structurally strengthened India’s housing sector, positioning it as a key pillar of economic growth.