Gujarat's Residential Real Estate Market Shows Clear Signs of Stagnation
Ahmedabad: The residential real estate market in Gujarat is displaying increasingly visible signs of stagnation, marked by a sharp and concerning decline in the number of home loan borrowers. This trend persists even as the total value of fresh home loan disbursals recorded a modest rise, highlighting a significant divergence in market dynamics.
Sharp Decline in Borrowers Contrasts with Marginal Rise in Disbursals
According to the latest comprehensive report from the State Level Bankers' Committee (SLBC) - Gujarat, the number of home loan accounts experienced a dramatic 42% year-on-year decline during the December quarter. The figures dropped precipitously from 1.75 lakh accounts to just 1.01 lakh accounts. In stark contrast, fresh home loan disbursals during the same period rose marginally by 5%, increasing from Rs 15,211 crore to Rs 16,028 crore.
Sector experts and analysts attribute this clear divergence to persistently weak demand in the affordable and mid-income housing segments. This weakness is coupled with a noticeable slowdown in new project launches across the state. The data strongly suggests that while significantly fewer borrowers are availing themselves of home loans, those who are taking loans are opting for higher ticket sizes, driving the overall value upward.
Banking Trends and Supply Side Moderation
Bank-wise trends detailed in the SLBC report point to a notable shift in lending patterns. Several private sector banks have strategically trimmed their exposure to housing loans, while public sector banks have increased disbursals in select, targeted pockets. The rise in overall loan value despite a steep drop in the number of accounts indicates a clear and substantial jump in average ticket sizes. This pattern suggests that credit growth in the housing sector is being driven more by high-value purchases rather than broad-based buyer participation.
Data from the Gujarat Real Estate Regulatory Authority (GujRERA) further reflects a moderation in supply. The state recorded 1,859 new project registrations in the 2022-23 financial year, which fell to 1,715 in 2023-24. Registrations saw a marginal recovery, rising to 1,822 in 2024-25. However, in the current financial year so far, only 1,418 projects have been registered, indicating continued caution among developers.
Segment-Wise Demand and Developer Sentiment
"The housing segments in the Rs 50-75 lakh bracket and at the higher end above Rs 5 crore continue to see steady demand," a senior banker told TOI. "However, the mid-range ticket sizes, particularly in the Rs 2-3 crore segment, are witnessing a pronounced slowdown. Buyers are turning increasingly cautious and are deferring big upgrades in the current economic climate."
Developers across the state report that residential markets in major cities like Ahmedabad, Surat, and Vadodara are witnessing lower sales volumes. Oversupply in key micro-markets is leading to elevated levels of unsold inventory. With overall demand remaining muted, many builders are adopting a cautious wait-and-watch approach and are deliberately holding back fresh project launches.
Expert Analysis and Future Outlook
Viral Shah, secretary of CREDAI-Gujarat, provided insight into the market dichotomy. "Affordable and mid-segment housing is struggling significantly due to weak demand, whereas the premium housing segment is seeing better traction and resilience," he said. "As a direct result, the overall number of home loan takers has reduced dramatically, but the average value of loans being sanctioned has increased. A potential rate cut by the Reserve Bank of India in the upcoming monetary policy review could serve as a catalyst to revive demand, particularly in the affordable and mid-income housing segments."
Real estate analysts concur that sustained high property prices, coupled with a generally cautious buyer sentiment, have weighed heavily on transaction volumes. This is occurring even as developers continue to report sustained interest in larger, premium homes, underscoring the market's bifurcation.
The lending pattern for the December quarter starkly illustrates the trend:
- Home Loan Accounts: Fell from 1.75 lakh to 1.01 lakh (a 42% decline).
- Loan Disbursals: Rose from Rs 15,211 crore to Rs 16,028 crore (a 5% increase).
This data, sourced from the SLBC Gujarat report, paints a clear picture of a real estate market at a crossroads, where credit growth is increasingly concentrated rather than widespread.
