Housing Financiers In A Sweet Spot, Says CLSA

Housing finance companies are going to be one of the biggest beneficiaries of the government's ambitious target of ensuring a home for every family, said broking house CLSA.

“Decade-best property affordability” and lower-cost of housing loans, which has come down by 4 percent over the past five years are the key drivers, said the broking firm.

The housing sector should see a revival over the next 5-7 years, aided by a combination of government's support in terms of the various affordable housing schemes and subsidy tax-breaks, and the option to use long-term savings like provident funds to buy homes.

The brokerage house estimates 8 percent compounded annual growth rate in volume and 13 percent in the value of housing finance sales over financial years 2017-24 period.

Moreover, CLSA expects that the housing financers will benefit from an uptick in the demand and better access to funds for the lenders.

More leeway for mutual and foreign funds to invest in housing finance companies will also aid the sector. The brokerage house assumes this will lift up India's gross domestic product from 9 percent to 12 percent.

Among the top picks in the financial sector, CLSA is bullish on HDFC Ltd., LIC Housing Finance Ltd. and Indiabulls Housing Finance Ltd.