India's Housing Price Index rose 3.6% in Q1FY27, matching the pace seen a year earlier despite ongoing West Asia conflict, according to reports from Business Standard. The RBI's index, which covers 18 cities, showed a slower pace compared to Q4FY26's 4.5% growth but maintained the same growth rate as Q1FY26. This stability in housing price appreciation signals resilience in the real estate market amid geopolitical uncertainties.
Five cities emerged as the primary drivers of housing price growth in Q1FY27, as reported by Business Standard. Chandigarh led with 49.6% growth, followed by Jaipur at 36.4%, Kanpur at 27.5%, Lucknow at 17.7%, and Thiruvananthapuram at 16.3%. The price appreciation in Chandigarh was attributed to recent revision in the collector rate, applicable from April 1, 2026, while unavailability of new land pockets has also contributed to higher prices in recent times.
Total credit outstanding grew 16.5% year-on-year to ₹213.6 lakh crore as of June 30, 2026, up from 9.9% growth a year earlier, while total deposits grew 11.3% to ₹256.5 lakh crore, according to RBI data. This marks the highest credit growth in eight quarters, driven by broad-based expansion across sectors. The credit-to-deposit gap widened to 512 basis points, the largest in eight quarters, indicating banks are increasingly dependent on external funding sources. As per CareEdge Ratings, the latest LDR high of 83.3% is significant because it was recorded in June, when seasonal factors typically do not push the ratio higher, suggesting the elevated level reflects an underlying funding gap rather than temporary seasonal effects.
Finance-sector lending, mainly bank funding to non-banking financial companies (NBFCs), drove credit expansion significantly, with NBFCs growing 22.4% to ₹25.3 lakh crore as reported by CareEdge Ratings. NBFCs and large corporates shifted towards bank funding as bond yields remained elevated. Industry credit also grew 15.5%, though infrastructure construction credit contracted 1.1%, while trade credit rose 18.1% and personal loans grew 12.7%. Public sector banks expanded credit by 17.3% compared with 14.8% for private sector banks, but PSBs' LDR rose to 79% from 73.9% a year earlier, leaving less headroom for further strong credit growth.
The funding pressure eased temporarily after the RBI's FCNR(B) swap facility, with mobilization standing at USD 136.4 billion by August 31, including USD 127.2 billion through FCNR(B) deposits, while the credit-deposit growth gap narrowed to around 360 basis points from about 500 basis points. However, CareEdge Ratings notes that these inflows provide only temporary relief. Deposit mobilization remains crucial for banks facing persistent competition for household savings, as savers favour higher-yielding alternatives. The high LDR leaves banks with less funding headroom, while asset quality remains a source of comfort despite potential geopolitical risks that could weigh on credit demand and repayment capacity.
