Premiumisation Trend in Tier-2 Cities: Housing Sales Decline While Higher-Value Units Thrive
With housing sales value remaining flat at ₹1.48 lakh crore across the top 15 tier-2 cities in 2025, sales volumes declined 10% YoY to 1,56,181 units. This trend reflects rising housing prices and increasing premiumisation, according to NSE-listed real estate data analytics firm PropEquity.
Except for Mohali and Lucknow, which saw growth in sales volume of 34% and 6% YoY respectively, the other 13 cities experienced declines up to 38%, with Visakhapatnam witnessing the maximum fall. The report further highlights the growing shift towards high-ticket housing. Homes priced under ₹1 crore saw a 15% YoY decline in volumes in 2025, with their share dropping to 72% from 77% in 2024. Conversely, homes priced above ₹1 crore witnessed a 9% growth in sales, with their share rising to 28% from 23% in 2024.
Ahmedabad is emerging as a dominant player in the tier-2 housing market. The city is poised to be regarded as a tier-1 city, having surpassed several established tier-1 markets in both housing launches and absorption. With its scale of development and depth of demand, Ahmedabad now rightly merits inclusion among India’s tier-1 urban centres. In absolute terms, the four cities of Gujarat—Ahmedabad, Gandhinagar, Vadodara, and Surat—together accounted for 63% of the total sales in the top 15 tier-2 cities, with Ahmedabad alone contributing 33% with 51,148 units sold.
Samir Jasuja, Founder & CEO of PropEquity, commented, “The slowdown in housing sales over the past two years is largely due to a shrinking supply of homes priced below ₹1 crore—a segment that has traditionally driven demand in tier-2 cities. Rising land and construction costs, along with changing buyer aspirations, are pushing new launches into higher price brackets. As a result, tier-2 markets are increasingly mirroring tier-1 cities, where volumes are declining even as prices continue to rise.”
Jasuja added, “Government focus on tier-2 cities—through enhanced urban development, improved connectivity, and the creation of industrial corridors and manufacturing hubs—has driven sustained price appreciation. This has pushed even average housing units in many tier-2 markets beyond the ₹1 crore mark, leading to slower absorption. Going forward, this trend could be a cause for concern, as affordability pressures begin to impact not just premium segments but also affordable and mid-income housing in these cities.”
New supply across the top 15 tier-2 cities declined by 6% to 1,36,243 units in 2025, down from 1,45,139 units in 2024. The contraction was observed across price segments, with the supply of homes priced under ₹1 crore declining by 5%, and those above ₹1 crore falling by 8%. Mohali (108%), Bhopal (66%), Ahmedabad (3%), and Jaipur (2%) saw growth in new launches, while the other 11 cities experienced declines of up to 57%, with Bhubaneshwar witnessing the steepest decline. The four cities of Gujarat accounted for 64% of the total launches in 2025.
In 2025, housing sales in India’s top tier-2 cities saw a noticeable slowdown, driven largely by rising property prices and a growing shift toward higher-end homes. While demand for more affordable units weakened, premium housing continued to gain traction, reflecting changing buyer preferences and aspirations. The overall trend indicates that tier-2 cities are increasingly mirroring tier-1 markets, with slower volume growth but sustained price appreciation. This evolution poses potential affordability challenges, even as government initiatives and urban development continue to enhance connectivity and infrastructure in these emerging urban centers.
