Housing Supply in Top 15 Tier 2 Cities Falls by 35% in Q1 2025

New Delhi, June 12, 2025: Housing supply in the top 15 tier 2 cities fell by a whopping 35 per cent to 30,155 units in the January-March period with 48 per cent of the launches in the INR 50 lakh-1 crore price range, per a report by real estate data analytics firm PropEquity. The supply was 45,901 units with 36 per cent of the launches in the price range INR 50 lakh-INR 1 crore in Q1 2024.

Bhubaneshwar witnessed the highest decline at 72 per cent to 772 units in Q1 2025 while Nashik saw the least decline at 2 per cent to 24,66 units.

Eastern and central India saw a 68 per cent fall in new launches, the highest decline, followed by 55 per cent in northern India, 28 per cent in western India and 26 per cent in southern India.

The seven state capitals in the top 15 tier 2 cities saw a 43 per cent decline in supply in Q1 2025.

“The decline in supply is a result of a cautious approach and shifting priorities by developers. Financially robust developers with a strong balance sheet look to launch premium homes to increase their profit margin,” said Samir Jasuja, Founder and CEO, PropEquity.

“As a result, the supply of homes under INR 50 lakh has seen a consistent decline due to its unviability. Meanwhile, the supply of units priced between INR 1 crore and INR 2 crore fell by 17 per cent and its share rose from 18 per cent to 23 per cent in Q1 2025.

He added, “With home loan rates hovering around 8-8.5 per cent, the recent reduction of 50bps in repo rate by the RBI will further drive down the home loan rates, thereby providing an impetus in the INR 50 lakh-2 crore priced homes in tier 2 cities.”

The tier 2 cities “present a huge opportunity for corporates and developers as massive infrastructure development and the government’s focus on making these cities as growth drivers will enable end-user demand”.

Price-wise supply trend:

Housing units priced under INR 2 crore accounted for 95 per cent of the total supply in Q1 2025, up from 87 per cent in the same period last year.

The supply of units priced under INR 50 lakh more than halved to 7,124 units in Q1 2025 as against 15,420 units in the same period last year.  Its share of total supply fell from 33 per cent to 24% in Q1 2025.

Similarly, the supply of units priced between INR 50 lakh and INR 1 crore dipped by 12 per cent and its share rose from 36 per cent to 48 per cent in Q1 2025.

The supply of units priced between INR 1 crore and INR 2 crore dipped by 17 per cent and its share rose from 18 per cent to 23 per cent in Q1 2025.

The supply of units priced INR 2 crore and above dipped by 73 per cent and its share dipped from 13 per cent to 5 per cent in Q1 2025.

State capitals saw a 90 per cent drop in supply of units priced under INR 50 lakh and a 13 per cent drop in supply of units priced between INR 50 lakh and INR 1 crore in Q1 2025. However, the supply of units priced between INR 1 crore and INR 2 crore rose by 31 per cent.