Something odd is happening in Gujarat’s housing market. Banks are giving out more money in home loans than they did a year ago. But, this lending is being done to far fewer people.
This is particularly striking for a state that positions itself as India’s model of growth and governance.
Lest forgotten, Gujarat has secured the hosting rights of Commonwealth Games 2030. The confidence in Gujarat could be gauged in the way India is setting sights on hosting the 2036 Olympic Games in the state.
If the mood is so upbeat, why has such a lending gap surfaced?
For the statistically inclined, the number of home loan accounts in the state reportedly fell 42% year-on-year in the December quarter, crashing from 1.75 lakh to just 1.01 lakh.
Yet total disbursals actually rose 5%, climbing from Rs 15,211 crore to Rs 16,028 crore, according to the State Level Bankers’ Committee (SLBC), Gujarat, published by a section of the media.
Do the math and the conclusion is uncomfortable. The average loan size has grown considerably. It means banks are largely writing bigger cheques for fewer, wealthier buyers.
The mass-market homebuyer (the salaried professional stretching to buy a first home or upgrade to something better) appears to have exited the picture.
Rampant inflation, salary cuts, layoffs, and business losses have squeezed household finances, leaving many ordinary buyers unable or unwilling to take on the burden of a home loan.
The reluctance goes beyond affordability. Many potential buyers are stepping back from long-term financial commitments. They are wary of debt-related stress, high interest costs, and they risk defaulting.
A growing number are choosing to save and spend prudently rather than stretch themselves thin over a 20-year loan.
Private sector banks pulled back their housing loan exposure during this period. Public sector banks picked up some slack in select pockets, but not enough to change the broader trend.
On the supply side, developers are not exactly rushing to build either. New project registrations with GujRERA reportedly slipped from 1,859 in 2022-23 to 1,715 in 2023-24. There was reportedly a slight recovery to 1,822 in 2024-25.
Reports mentioned that the current financial year has mustered only 1,418 registrations so far. Many builders, faced with rising unsold inventory in key micro-markets across Gujarat’s major cities, are simply sitting on their hands and holding back fresh launches.
It has emerged that Rs 50-75 lakh and the above-Rs 5 crore segments are holding up reasonably well.
It is the middle ground (the Rs 2-3 crore bracket) where the hesitation is most visible.
Buyers are waiting, gripped by the fear of being unable to repay and unwilling to lock themselves into long-term financial commitments in the current economic environment. Large upgrade decisions are being deferred indefinitely.
Affordable and mid-segment housing is struggling while premium homes continue to find takers. Fewer people are borrowing, but those who do are borrowing more.
The general sentiment is that a rate cut by the Reserve Bank of India in the next monetary policy review could bring fence-sitters back into the affordable and mid-income segments.
Real estate analysts say the problem runs deeper than just sentiment. Sustained high property prices have eroded affordability, keeping volumes under pressure even as developers report healthy interest in larger, premium homes.
For now, Gujarat’s housing market is increasingly a tale of two buyers: the premium few who are active, and the cautious many who are not.
Also Read: Home Is Where Wealth Is – Gujarat Witness Surge In Housing Loans https://www.vibesofindia.com/home-is-where-wealth-is-gujarat-witness-surge-in-housing-loans/
