House Sales Decline 8% in Tier-II Cities, Yet Overall Value Increases

Housing sales in India’s tier-II cities showed a mixed trend in the first quarter of 2025, with a notable decline in the number of units sold but an increase in overall transaction value. According to data from real estate consultancy PropEquity, 43,781 housing units were sold across 15 tier-II cities, reflecting an 8% decrease from the same period last year. Despite this drop in volume, the total transaction value rose by 6%, reaching Rs 40,443 crore, compared to Rs 38,102 crore in the previous year. This report highlights the evolving dynamics of the housing market in these emerging urban centers.

Sales Performance Across Cities

The analysis conducted by PropEquity included key cities such as Ahmedabad, Surat, Vadodara, and Lucknow, among others. Lucknow emerged as a standout performer, recording a 25% year-on-year increase in housing units sold, totaling 1,301 units. Coimbatore and Gandhinagar followed closely, with increases of 21% and 18%, respectively. However, the overall picture was mixed, as 11 cities experienced declines in sales. Visakhapatnam faced the most significant drop, with a staggering 37% decrease in units sold. Ahmedabad, the largest market in the survey, saw a slight 1% dip in sales volume, yet the transaction value increased by 7%, indicating a shift in buyer preferences towards higher-value properties.

Factors Influencing Market Trends

Samir Jasuja, Founder and CEO of PropEquity, attributed the contrasting trends in sales volume and value to a decrease in supply during the March quarter. He noted that state capitals performed relatively better, suggesting that infrastructure improvements continue to drive demand in these regions. Additionally, Jasuja pointed to the Reserve Bank of India’s monetary policy as a potential catalyst for future growth. With a 50 basis points cut in the repo rate since January 2025, he anticipates further reductions that could lower home loan rates, thereby stimulating housing demand.

Emerging Opportunities in Tier-II Cities

The growing appeal of tier-II cities as housing markets is underscored by insights from industry leaders. Mohit Malhotra, Founder and CEO of NeoLiv, emphasized that these cities are rapidly transforming due to increased corporate presence and infrastructure development. This transformation is attracting strategic investments, leading to a surge in demand and property prices across various micro-markets. Yashank Wason, Managing Director of Royal Green Realty, echoed this sentiment, highlighting that as metropolitan areas become saturated, tier-II cities present a compelling blend of opportunities and lifestyle advantages.

Future Outlook for Housing Demand

Despite the current decline in sales, industry experts remain optimistic about the future of tier-II housing markets. Vijay Harsh Jha, Founder of VS Realtors, believes that the recent downturn is temporary. He anticipates that strong economic growth, coupled with lower home loan rates, will revive demand in these emerging markets. As the landscape of housing continues to evolve, tier-II cities are poised to play a crucial role in India’s real estate growth trajectory, driven by ongoing investments and infrastructure improvements.

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