Tier-II Housing Market Sees 10% Sales Decline in 2025, Premium Segment Expands
Housing sales across 15 major tier-II cities in India fell by 10 per cent in 2025, dropping to 1,56,181 units, according to data released by real estate analytics firm PropEquity. Despite this volume decrease, the total sales value remained unchanged at Rs 1.48 lakh crore, indicating a significant shift towards higher-priced properties.
Decline in Affordable Homes Drives Market Slowdown
Samir Jasuja, founder and CEO of PropEquity, explained that the slowdown observed over the past two years is largely due to a shrinking supply of homes priced below Rs 1 crore. This segment has traditionally fueled demand in tier-II markets. "The slowdown in housing sales over the past two years is largely due to a shrinking supply of homes priced below Rs 1 crore — a segment that has traditionally driven demand in tier-2 cities," Jasuja stated, as quoted by PTI.
He added that rising land and construction costs, along with evolving buyer preferences, are prompting developers to launch projects in higher price brackets. "As a result, tier-II markets are increasingly mirroring tier-1 cities, where volumes are declining even as prices continue to rise," he noted.
Premium Housing Segment Records Growth
Data from PropEquity revealed that homes priced above Rs 1 crore recorded a 9 per cent growth in sales in 2025. Their share in total housing sales increased to 28 per cent, up from 23 per cent in 2024, highlighting a clear trend towards premiumization.
Industry leaders echoed this shift. Rohit Kishore, CEO of Hero Realty, said, "Tier-II cities are seeing healthy and consistent growth in premium homebuying, particularly in the Rs 1–2 crore bracket." Manish Agarwal, president of CREDAI Haryana and managing director of Satya Group, attributed this to improved infrastructure, better connectivity, and expanding job opportunities, which are attracting both end-users and investors.
Aman Sharma, MD and founder of Aarize Group, added that demand for homes priced above Rs 1 crore is rising steadily. "Buyers in these markets are prioritising lifestyle-led upgrades, larger sizes, and integrated communities over affordability," he explained. Yashank Wason, managing director of Royal Green Realty, noted that tier-II cities are gaining importance in the broader real estate landscape.
City-Wise Performance Shows Mixed Trends
Among the 15 cities analysed, most reported declines in housing sales in 2025 compared to the previous year. Key highlights include:
- Ahmedabad: 8% fall to 51,148 units from 55,315 units.
- Surat: 15% drop to 19,835 units from 23,342 units.
- Vadodara: 19% decline to 13,798 units.
- Gandhinagar: Marginal dip to 13,710 units from 13,884 units.
- Nashik: 10% fall to 11,188 units.
- Jaipur: 5% decline to 9,758 units.
- Nagpur: 18% drop to 6,260 units.
- Bhubaneshwar: 25% fall to 4,885 units from 6,538 units.
- Coimbatore: 4% decline to 3,702 units.
- Bhopal: 5% fall to 3,599 units.
- Goa: Sales slipped marginally to 3,507 units from 3,518 units.
- Visakhapatnam: Sharpest drop at 38% to 2,406 units from 3,858 units.
- Kochi: 17% decline to 2,214 units.
However, not all markets weakened. Mohali stood out with a 34 per cent jump in sales to 6,118 units from 4,554 units. Lucknow also bucked the trend, posting a 6 per cent rise to 4,053 units from 3,812 units.
Overall, the data suggests that while demand in tier-II cities remains resilient in value terms, a clear shift towards higher-priced homes is reshaping these markets, with premium segments gaining ground amid broader volume declines.
