Home Sales in Top 15 Tier 2 Cities Down 8% in Q1 2025 Despite 6% Rise in Sales Value: Report
Housing sales in India's top 15 tier 2 cities saw an 8% decline in Q1 2025, with units sold dropping to 43,781. However, the sales value increased by 6% to ₹40,443 crore, indicating a shift towards premium housing.
Housing SalesTier 2 CitiesReal EstateMarket TrendsPropequityReal Estate NewsJun 01, 2025
Total residential units sold dropped to 43,781, compared to 47,378 units during the same period last year.
However, overall sales value increased by 6%, rising to ₹40,443 crore from ₹38,102 crore in Q1 2024. This contrast suggests a move towards premium housing or price appreciation in these growing urban centres.
Supply Constraints and Market Sentiment
PropEquity CEO Samir Jasuja said the decline was primarily due to reduced supply during the January–March quarter, a trend also seen in tier 1 cities. “Demand in tier 2 cities remains robust, but the lack of new launches this quarter has impacted overall absorption,” said Jasuja.
He added that stronger social infrastructure, better connectivity, and job growth in sectors such as IT and manufacturing are fuelling demand—especially among those returning to their hometowns from metros.
Regional Breakdown: Sales Dip Across All Zones
All major regions recorded a drop in housing sales volumes in Q1 2025:
- Central & Eastern India (Bhopal, Bhubaneshwar): 18% decline
- Southern India (Visakhapatnam, Kochi, Coimbatore): 12% decline
- Northern India (Lucknow, Jaipur, Mohali): 14% decline
- Western India (Ahmedabad, Surat, Vadodara, etc.): 6% decline
Despite the overall dip, Western India remained the largest contributor, accounting for 79% of total units sold and 74% of the total sales value. Ahmedabad led the region, selling 14,583 units worth ₹13,565 crore, with only a marginal 1% fall in volumes.
Sharpest Declines: Visakhapatnam Leads
Visakhapatnam saw the sharpest fall among individual cities, with a 37% decline in units sold and a 35% drop in sales value. Other cities such as Surat, Vadodara, and Nagpur also reported lower sales, although Vadodara and Nagpur recorded only a slight 1% dip in value.
State Capitals Offer Some Resilience
Six state capitals—Gandhinagar, Jaipur, Bhubaneshwar, Lucknow, Goa, and Bhopal—performed better than the overall market. They reported just a 5% drop in sales volume while registering a 17% rise in value. Together, these cities contributed 25% of total unit sales and 30% of total transaction value.
Future Outlook
The outlook for the coming quarters remains cautiously optimistic. The Reserve Bank of India has cut the repo rate by 50 basis points since January 2025, and further reductions could follow. This is expected to reduce home loan rates, which may improve affordability and revive demand.
“Once the rate cuts are fully transmitted by banks, affordability will improve and we expect stronger housing uptake in tier 2 cities going forward,” added Jasuja.
Frequently Asked Questions
What is the main reason for the decline in housing sales in tier 2 cities?
The main reason for the decline in housing sales in tier 2 cities is reduced supply during the January–March quarter, which has impacted overall absorption.
Which region saw the highest decline in housing sales?
Central & Eastern India (Bhopal, Bhubaneshwar) saw the highest decline with an 18% drop in housing sales.
How did the sales value change despite the decline in units sold?
Despite the decline in units sold, the sales value increased by 6%, indicating a shift towards premium housing or price appreciation.
Which city saw the sharpest decline in housing sales?
Visakhapatnam saw the sharpest decline with a 37% drop in units sold and a 35% drop in sales value.
What is the outlook for the housing market in tier 2 cities in the coming quarters?
The outlook for the housing market in tier 2 cities in the coming quarters remains cautiously optimistic, with expected improvements in affordability due to repo rate cuts by the Reserve Bank of India.
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