Tier-II City Housing Slump: 35% Drop in New Supply
India's top 15 tier-II cities experienced a significant 35% decline in new housing supply during the first quarter of 2025, affecting major cities like Ahmedabad, Surat, and Jaipur. Experts attribute this to rising costs and shifting developer priorities.
Tierii CitiesHousing SupplyReal Estate MarketDeveloper PrioritiesPremium HomesReal Estate NewsJun 18, 2025
New Delhi, Jun 17 (PTI) India's 15 major tier-II cities saw a 35% fall in new supply of housing properties to 30,155 units during January-March, according to PropEquity, a real estate data analytics firm. The new supply stood at 45,901 units in the first quarter of 2024.
Samir Jasuja, Founder and CEO of PropEquity, said, “The decline in supply is a result of a cautious approach and shifting priorities by developers. Financially robust developers with strong balance sheets look to launch premium homes to increase their profit margin.”
As per the data, new housing supply in Ahmedabad fell 35% to 11,096 units during January-March 2025 from 17,108 units in the year-ago period. Gandhinagar saw a 10% decline in housing supply to 4,356 units from 4,825 units during the period under review. Fresh housing supply slipped 39% in Surat to 3,309 units from 5,439 units. In Nashik, the new supply decreased 2% to 2,466 units from 2,509 units. Vadodara saw a 23% fall to 2,149 units from 2,790 units, while Jaipur witnessed a 55% decline to 1,348 units from 2,997 units.
New supply in Lucknow fell to 1,026 units from 2,256 units. In Nagpur, the supply of new homes went down 28% to 1,036 units from 1,432 units. Bhubaneshwar saw a steep decline of 72% to 772 units from 2,804 units. In Goa, the fall was 24% to 444 units from 587 units. New supply of residential properties in Bhopal decreased 51% to 365 units from 738 units. Mangalore saw a 64% reduction to 269 units from 753 units. In Kochi, the new supply diminished by 49% to 225 units from 437 units. Trivandrum saw a 71% drop to 217 units from 751 units.
However, new homes supply in Coimbatore jumped to 1,077 units in January-March this year from 475 units in the year-ago period.
“The supply dip in tier-2 cities is largely a result of developers recalibrating their launch pipelines amid rising input costs, tighter funding, and selective demand in these markets,” Rajat Khandelwal, Group CEO of Tribeca Developers, said.
Kirthi Chilukuri, Founder & MD of Stonecraft Group, said, “The decline in housing supply across tier-2 cities in Q1 2025 marks a turning point, one that holds immense potential for forward-thinking developers. At Stonecraft Group, we view this as an opportunity to pioneer sustainable, biophilic design that not only meets the growing demand for high-quality housing but also fosters vibrant communities in harmony with nature.”
Vijay Harsh Jha, founder of VS Realtors, said that tier-2 cities are moving towards premiumisation as homes priced at Rs 1-2 crore have shown greater demand. “However, the decline in Rs 50 lakh homes points to growing concern in view of these cities attracting a lot of people for jobs. The real estate sector, however, remains strong in these cities and a slowdown in supply is a temporary phenomenon,” he added.
Frequently Asked Questions
What is the percentage drop in new housing supply in tier-II cities during Q1 2025?
There was a 35% drop in new housing supply in tier-II cities during Q1 2025.
Which cities experienced the highest decline in housing supply?
Bhubaneshwar and Trivandrum experienced the highest declines, with Bhubaneshwar seeing a 72% drop and Trivandrum a 71% drop.
What are the main reasons for the decline in housing supply in tier-II cities?
The main reasons are rising costs, tighter funding, and selective demand in these markets.
Which city saw an increase in new housing supply?
Coimbatore saw an increase in new housing supply, rising to 1,077 units in Q1 2025 from 475 units in the previous year.
What is the trend in housing prices in tier-II cities?
Tier-II cities are moving towards premiumisation, with homes priced at Rs 1-2 crore showing greater demand.
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