According to a recent report by a leading real estate research firm, Tier 2 and 3 cities of India has witnessed a steep growth in the home loans in the past few years. The data which was collected from 2012-13 to 2017-18 showed that the compounded annual growth rate (CAGR) in these cities ranged between 15-36 percent.
The report also states the main reason behind increasing such popularity is the low price of the property and the presence of affordable housing. This has led to an increase in the traction among homebuyers who are now moving towards smaller cities to invest in a property.
On the other hand, CAGR in four leading Tier- 1 i.e. Mumbai, Delhi, Chennai, and Kolkata recorded between 8-12 percent.
Elaborating more on the above report, sources said that cities like Chandigarh, Ahmedabad, Sonepat, Gandhinagar, Jaipur are seeing more property buyers due to better connectivity, social and civic infrastructure and proximity to the metro cities. Due to which, professionals who are working in metro cities prefer to invest in a residential project in Tier 2 and 3 cities situated on the outskirts of the main city.
Speaking on the report, Ramesh Nair, CEO, Country Head, JLL India said, “The above revelations show the increasing homebuyer’s interest in small cities. While the share of home loans in such cities has increased from 78 % to 84%, it has decreased to 16% from 22% in the metro cities.”
For instance, in Gujarat, approximately eight cities have registered a higher home loan growth rate as compared to the Tier-1 cities of Gujarat. These cities include Ahmedabad, Gandhinagar, Surat, Valsad, Bharuch, Vadodara, Rajkot, and Jamnagar that witnessed a growth of 17%, 29%, 26%, 26%, 25%, 23%, 21%, and 21% respectively.