The financial stability report of the Reserve Bank of India (RBI) shows bank credit to the housing sector declined to 9.5 percent in 2012-13 from a high 13.3 percent in 2007-08.
The report notes that the decline in the growth of bank credit to the sector brought down demand. However, despite this, house prices in some metropolitan cities have witnessed significant increases in the recent past, the report notes.
Further, the report, which is released twice a year, shows non performing asset in home loan category declined in the last three years.
The report calls for the development of indicators other than price and volume indices and credit to the housing sector to gauge the trends in and the overall health of the sector.
Calling for better and closer monitoring of the sector to stem any possible bubbles, the report said adding it is linked to as many as 250 sub-sectors, reflecting its crucial role in the economy.
It observed there was a growing tendency of completely up-fronting of construction finance by home buyers to developers in some cases and availability of construction finance to developers at rates on par with those for home buyers.
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