Housing Sales in 30 Major Tier-II Cities Decline by 13% to 41,871 Units in Q3 2024: PropEquity Report
Housing sales in 30 major tier-II cities in India dropped by 13% to 41,871 units during the July-September quarter of 2024, according to the latest report by PropEquity. The decline is attributed to a higher base effect and a significant decrease in new l
Real EstateTierii CitiesHousing SalesPropequityProperty InvestmentReal EstateOct 21, 2024
The western zone, comprising major cities like Ahmedabad, Vadodara, Gandhinagar, Surat, Goa, Nashik, and Nagpur, contributed 72% to the total sales. Samir Jasuja, CEO & Founder of PropEquity, attributes the decline in sales and launches to the higher base effect, noting that 2023 saw historic highs in the real estate sector.
Despite the drop in sales, there are positive indicators. The low cost of living, availability of a skilled workforce, and advantageous operational costs for companies, along with good connectivity and infrastructure in state capitals, continue to drive demand for homes.
However, when compared to the top ten cities, the performance of these 30 tier-II cities is still lagging, with sales and launches being only a third of those in the top cities. Shashank Vashishtha, Managing Director of Exp Realty India, remains optimistic. He believes that the market remains resilient and that these adjustments reflect a natural recalibration, offering homebuyers an opportunity as developers focus on sustainable growth and affordability.
Vashishtha expects strong sales in the current festive quarter. On the investment front, Rochak Bakshi, Founder and CEO of True North Financial Services, points out that real estate investment in tier-II cities has historically not been very lucrative. He notes that despite improvements in connectivity and infrastructure, these cities have not generated the kind of returns that attract significant investment.
The cost of managing a property, poor rental yields, lackluster capital value appreciation, and the highly illiquid nature of investments in these cities make them a risky proposition for investors. Overall, while the market shows signs of stability, it also highlights the need for more strategic and sustainable approaches to real estate development in tier-II cities.
Frequently Asked Questions
What is the percentage decline in housing sales in tier-II cities in the July-September quarter of 2024?
Housing sales in 30 major tier-II cities in India fell by 13% to 41,871 units in the July-September quarter of 2024.
How much did new launches (new supply) decline in the same period?
New launches (new supply) fell by 34% to 28,980 units in the July-September quarter of 2024.
Which region contributed the most to total sales in the July-September quarter of 2024?
The western zone, comprising cities like Ahmedabad, Vadodara, Gandhinagar, Surat, Goa, Nashik, and Nagpur, contributed 72% to the total sales.
What factors are driving demand for homes in tier-II cities?
The low cost of living, availability of a skilled workforce, advantageous operational costs for companies, and good connectivity and infrastructure in state capitals are driving demand for homes in tier-II cities.
Why are real estate investments in tier-II cities considered risky?
Real estate investments in tier-II cities are considered risky due to the high cost of managing properties, poor rental yields, lackluster capital value appreciation, and the highly illiquid nature of such investments.
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