The top of India’s largest non-public mortgage supplier has forecast that India’s youth bulge will propel demand for housing for years, as rising incomes on the planet’s most populous nation have made properties extra inexpensive.

“What offers me confidence that the expansion will stay sturdy for a variety of years is the truth that India has a younger inhabitants,” mentioned Keki Mistry, chief government of Housing Improvement Finance Company (HDFC), in an interview with the Monetary Occasions on the firm’s Mumbai headquarters.

Properly over half of India’s inhabitants is aged below 30, whereas the common first-time homebuyer is aged 37-38, mentioned Mistry.

“All these youthful individuals will get to an age the place they are going to essentially want to purchase a house,” added the four-decade trade veteran. “To my thoughts, there might be a structural demand for housing and due to this fact demand for housing financing.”

Mistry’s feedback come because the 68-year-old readies for partial retirement right into a non-executive position, as HDFC prepares to merge with subsidiary HDFC Financial institution, India’s largest non-public lender, in what might be India’s largest ever company mixture. The merger is scheduled to finish in July.

As India’s economic system has recovered from the pandemic and its inhabitants grown to turn out to be the world’s largest this yr, customers have borrowed sooner than corporations to be able to purchase items from homes to automobiles or fund training.

Throughout March banks elevated the quantity of non-public loans they wrote by 20.6 per cent yr on yr, in contrast with 12.6 per cent in the identical month a yr earlier.

The Reserve Financial institution of India, which publishes the information, mentioned the leap was “primarily pushed by ‘housing loans’”, whereas lending to trade grew at a extra sluggish 5.7 per cent in March, slowing from a 7.5 per cent enhance the earlier yr.

Mistry mentioned he was unconcerned concerning the fast progress in unsecured lending. “Even in unsecured loans there’s not been any actual credit score concern which has ever cropped up,” he mentioned, arguing that “rules in India are extraordinarily tight”.

Sturdy house-buying spurred a 21 per cent leap in HDFC’s web earnings for the yr ending this March, to Rs460bn (about $5.6bn), as growth ramps up in India’s smaller cities and cities.

India nonetheless has one of many world’s lowest charges of housing loans to gross home product, though that ratio has virtually doubled each decade this century — from 3.2 per cent housing loans to GDP in 2001-2, to 10.6 per cent in 2021-22 — based on the Nationwide Housing Financial institution.

Nonetheless, rising incomes, comparatively stagnant housing costs and authorities incentives are making house- or apartment-buying a extra reasonable prospect for a lot of center class customers. “Affordability right this moment is rather a lot higher than what it traditionally has been,” mentioned Mistry.

In the meantime, rising rates of interest, which have damage housing demand in different economies, have barely registered in India the place mortgage charges have traditionally been excessive.

“If 1 per cent goes as much as 4 or 5 per cent that’s a large enhance,” mentioned Mistry. “In India, rates of interest have been all the time excessive, so when the charges go up . . . the proportion enhance within the rate of interest just isn’t that vital.”

Mortgage rates of interest vary between 9 and 14 per cent in India, based on non-bank lender Bajaj Finserv. Within the UK, by comparability, the common variable mortgage price stood at 7.4 per cent in April, based on authorities statistics.

Mistry, who has labored for HDFC since 1981, mentioned customers had additionally turn out to be more and more snug with taking loans: “The worry of borrowing cash, which was there 50 years in the past, just isn’t there right this moment.”