Housing Market Changes in Tier 2 Cities

Affordable Housing Supply Drops by 54% in Early 2025

New Delhi saw a big drop in affordable housing. In the first three months of 2025, India’s top 15 tier 2 cities had 54% fewer affordable homes. This is based on data from PropEquity, a real estate research firm.

What the Data Shows

• Overall, new homes in these cities dropped by 35% compared to last year. Only 30,155 units were available in early 2025.
• Homes priced between Rs 50 lakh and Rs 1 crore made up 48% of the new listings this year.
• Bhubaneshwar had the biggest drop, with 72% fewer homes, totaling just 772 units.
• Nashik had the smallest drop, with only a 2% decrease, totaling 2,466 units.

Regional Differences

• Eastern and Central India saw the biggest drop in new homes, with a 68% decrease.
• Northern India followed with a 55% drop.
• Western India had a 28% decrease.
• Southern India saw a 26% drop.
• In the seven state capitals among the top 15 tier 2 cities, the supply fell by 43%.

Why Developers Are Changing Strategies

Samir Jasuja, Founder and CEO of PropEquity, explained the drop in supply. He said it shows a change in strategy by developers. “Developers are being cautious and changing their priorities. Strong developers with good finances are launching premium homes to increase profits,” he stated.

Jasuja also added, “Homes priced between Rs 1-2 crore have seen a 17% increase in supply this year. Their share has grown from 18% to 23%.”

Opportunities in the Market

According to Jasuja, home loan rates are currently between 8% and 8.5%. But the RBI’s recent cut in the repo rate by 50 basis points is expected to lower these rates further. This could help properties priced between Rs 50 lakh and Rs 2 crore in tier 2 cities.

“Tier 2 cities offer a huge opportunity for companies and developers. Big infrastructure projects and the government’s focus on these cities will drive demand from home buyers,” Jasuja said.

Breakdown of Housing Supply

• 95% of new homes in early 2025 were priced below Rs 2 crore, up from 87% a year ago.
• The number of homes under Rs 50 lakh dropped a lot, from 15,420 units in early 2024 to 7,124 units in early 2025.
• Homes priced between Rs 50 lakh and Rs 1 crore decreased by 12% in number but increased in share from 36% to 48%.
• Properties in the Rs 1–2 crore range decreased by 17% in number, but their share increased from 18% to 23%.
• Homes priced above Rs 2 crore saw a big 73% drop in supply, reducing their share from 13% to 5%.

Insights on State Capitals

• In the seven state capitals, the supply of homes below Rs 50 lakh dropped by 90%.
• Homes in the Rs 50 lakh to Rs 1 crore category decreased by 13%.
• The Rs 1–2 crore segment saw a 31% increase in supply during this period.