Home Sales in Top 15 Tier 2 Cities Drop 8% in Q1 2025, Sales Value Rises 6%
Housing sales in India's top 15 tier 2 cities fell by 8% in the first quarter of 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 EstateProperty MarketPropequityReal EstateJun 01, 2025
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.
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.
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.
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.
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.
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 caused the decline in housing sales in tier 2 cities?
The decline in housing sales in tier 2 cities is primarily due to reduced supply during the January–March quarter, a trend also observed in tier 1 cities. The lack of new launches has impacted overall absorption.
How did the sales value change despite the decline in units sold?
Despite the decline in units sold, the sales value increased by 6%, rising to ₹40,443 crore from ₹38,102 crore in Q1 2024. This suggests a move towards premium housing or price appreciation in these growing urban centres.
Which region performed the best in terms of housing sales?
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.
What was the performance of state capitals in the housing market?
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.
What is the future outlook for housing in tier 2 cities?
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, improving affordability and reviving demand.
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