India’s housing boom: Real estate dominates Indian household savings with highest allocation
Sunainaa Chadha NEW DELHI
India’s household sector serves as a primary source of financial resources through savings, contributing a substantial 70% to the total gross domestic savings. The growth in housing sales in cities has been particularly impressive, indicating that urban households are diversifying the deployment of their savings.
The momentum hasn’t slowed down. The first quarter (Q1) of 2024 witnessed a phenomenal 41 per cent growth in sales compared to the same period last year, with a record 1.2 lakh units sold. Since mid-2022, the number of new housing units launched has consistently crossed the one lakh mark each quarter.
Similarly, personal loans for housing have surged, corresponding to the increase in housing demand, noted the Economic Survey
Most households save in two ways – financial assets (like bank deposits, stocks, and mutual funds) and physical assets (like real estate, gold, and other durable goods), a global brokerage firm BofA Securities said in a report in May 2024.
As of 2022, over half (56%) of household savings were in financial assets, which is double the amount seen a decade ago. This suggests a shift towards more diversified saving methods. Despite the rise in financial savings, a large portion (77%) of household assets are still tied up in real estate.
On average, an Indian household holds 77% of its total assets in real estate, 7% in other durable goods, and 11% in gold.