Gujarat’s housing market is showing a shift in borrowing patterns, with fewer buyers taking home loans while those who continue to borrow are opting for substantially larger amounts. The trend reflects the impact of rising residential property and construction costs, which are making home ownership more difficult for buyers in the mass-market segment.
According to the latest data from the State Level Bankers’ Committee (SLBC), the average housing loan size in Gujarat increased by 72% year-on-year to ₹18.8 lakh in the June quarter. At the same time, the number of fresh housing loan accounts declined by 28% to 93,716.
Despite the fall in the number of borrowers, total home loan disbursals increased by 24% to ₹17,600 crore during the quarter. The contrasting figures indicate that the housing finance market is increasingly being driven by borrowers with higher purchasing capacity.
The trend is linked to the increase in land, construction and residential property prices across Gujarat. As housing costs rise faster than the incomes of many households, smaller-ticket buyers are finding it more difficult to enter the market.
Viral Shah, secretary, CREDAI Gujarat, said that land and construction costs have increased substantially across the state, pushing residential prices higher. According to him, buyers with higher purchasing power remain active, while finance-sector professionals, business owners and high-net-worth individuals are taking larger housing loans.
Premium Housing Continues to See Demand
Gujarat’s housing market is increasingly showing a divide between premium housing and the mass-market segment. Affluent buyers continue to purchase larger homes, while households with limited budgets face greater affordability constraints.
Ahmedabad’s established neighbourhoods are continuing to attract demand. Areas such as Naranpura, Ranip, Navrangpura and Paldi are seeing redevelopment activity as residents and buyers prefer established locations with existing infrastructure and connectivity.
The situation is different in the city’s peripheral areas. Locations such as Shela, South Bopal, Godhavi, Shilaj, Gota, Ognaj, Odhav, Tragad and Nikol have traditionally attracted buyers because of comparatively lower prices. However, rising construction and land costs have reduced this affordability advantage.
According to a banking sector source, an average three-bedroom apartment in several peripheral areas of Ahmedabad is now priced at around ₹1 crore. Such prices can put home ownership beyond the reach of many salaried professionals.
Middle-Income Segment Faces Pressure
The changing housing loan pattern could have implications for developers planning projects for middle-income buyers. Premium housing projects continue to attract customers capable of absorbing higher property prices, while projects dependent on a larger pool of price-sensitive buyers may face slower demand.
The rise in average loan size also suggests that existing borrowers are committing more capital towards home purchases. However, the decline in new housing loan accounts indicates that a section of potential buyers may be postponing purchases because of affordability concerns.
For Gujarat’s residential market, the coming period could therefore see stronger demand for higher-value homes alongside greater pressure on projects aimed at middle-income and first-time buyers. Developers may need to balance rising input costs with pricing strategies that keep housing accessible to a wider section of buyers.
