India's Tier-II Property Market: Sales Dip 4%, Value Jumps 4%! Is This a Premium Home Revolution?

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AuthorSimar Singh|Published at:
India's Tier-II Property Market: Sales Dip 4%, Value Jumps 4%! Is This a Premium Home Revolution?
Overview

Housing sales in India's top fifteen Tier-II cities dropped 4% year-on-year to 39,201 units in July-September 2025, according to PropEquity. However, sales value increased by 4% to ₹37,409 crore, indicating a shift towards premium homes. New supply also declined 10% YoY, with Bhubaneswar seeing the largest sales drop and Trivandrum the largest rise. Ahmedabad remained the top market for sales and launches.

Tier-II Cities See Housing Sales Dip, Value Rise

Housing sales in India's fifteen major Tier-II cities experienced a 4% year-on-year decline in unit volume during the third quarter of 2025, reaching 39,201 units. Despite this dip, the total sales value rose by 4% to ₹37,409 crore, suggesting a significant trend towards more expensive properties.

Key Numbers and Trends

  • PropEquity's report highlights that new housing supply decreased by 10% year-on-year in Q3 2025.
  • The total sales volume for the quarter was 39,201 units, a 4% drop from the previous year.
  • Conversely, the total sales value climbed 4% to ₹37,409 crore.
  • On a quarter-on-quarter (QoQ) basis, housing sales fell by 3%, sales value by 1%, and new launches by 26%.

City-Specific Performance

  • Eight out of the fifteen Tier-II cities experienced a year-on-year decline in housing sales.
  • Bhubaneswar recorded the steepest sales decline at 26% YoY.
  • Trivandrum, however, saw the largest sales increase at 19% YoY.
  • Bhubaneswar also faced a significant drop in new launches, down 88% YoY.
  • Ahmedabad led the market in both sales volume and new launches for Q3 2025.

Factors Influencing Sales

  • Samir Jasuja, Founder and CEO of PropEquity, noted a steady decline in new housing launches, particularly in the affordable and mid-income segments.
  • Rising input costs and evolving consumer preferences for larger and higher-priced homes are moderating sales momentum in these segments.
  • Despite current trends, Tier-II cities are considered vital growth engines for India, driven by expanding job opportunities, better infrastructure, and improved connectivity.

Regional Performance

  • North India, including cities like Lucknow, Mohali, and Jaipur, stood out as an outlier, reporting a 16% YoY and 7% QoQ rise in sales.
  • Western India (Ahmedabad, Surat, etc.) experienced a 6% YoY and 4% QoQ decline, accounting for 76% of total sales.
  • Southern India (Coimbatore, Trivandrum, etc.) saw a 7% YoY decline but a 3% QoQ rise.
  • Central and Eastern India (Bhopal, Bhubaneswar) faced a significant 14% YoY and 13% QoQ decline.

Impact

  • The shift towards premium homes in Tier-II cities could benefit developers focusing on the higher-end market.
  • A decline in overall unit sales might impact sectors reliant on higher transaction volumes, like construction materials, home furnishings, and logistics.
  • The trend suggests a maturing real estate market in smaller cities, with buyers potentially having more disposable income or seeking better quality.
  • This could lead to increased investment in infrastructure and amenities in these cities to support sustained demand.
  • Impact Rating: 7/10

Difficult Terms Explained

  • Tier-II cities: Cities in India that are smaller than metropolitan areas (Tier-I cities) but are developing rapidly with growing economic activity and infrastructure.
  • YoY (Year-on-Year): A comparison of data from one period with the same period in the previous year.
  • QoQ (Quarter-on-Quarter): A comparison of data from one quarter with the previous quarter.
  • Premium homes: Residential properties that are higher in price and quality compared to the average market offerings, often featuring better amenities, construction, and location.
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