Housing supply in Top 15 tier 2 Cities Falls by 35% in Q1 2025: PropEquity

Housing supply in India’s top 15 tier 2 cities fell by a whopping 35 percent to 30,155 units in January-March period of 2025 with 48 percent of the launches in the Rs. 50 lakh - 1 crore price range, said a report by NSE-listed real estate data analytics firm PropEquity.

The supply stood at 45,901 units with 36 percent of the launches in price range Rs. 50Lakh-1crore. in Q1 2024.

Bhubaneshwar witnessed the highest decline at 72 percent to 772 units in Q1 2025 while Nashik saw the least decline at 2 percent to 2466 units.

• Bhubaneshwar witnessed the highest decline (72 percent) while Nashik saw the lowest decline (2 percent).
• Housing units priced under Rs. 1 crore accounted for 72 percent of the total housing supply in Q1 2025
• Supply of housing units priced under Rs. 50 lakh fell by 54 percent while its share dropped to 24 percent in Q1 2025.
• Housing units priced between Rs. 1-2 crore saw both Y-o-Y increase in supply as well as increase in share from 18 percent to 23 percent in Q1 2025.

The report further added that the Eastern and Central India with 68 percent fall in new launches in Q1 2025 saw the highest decline followed by 55 percent in Northern India, 28 percent in Western India and 26 percent in Southern India.

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The seven State Capitals in the top 15 tier 2 cities saw 43 percent decline in supply in Q1 2025. 

Samir Jasuja, Founder and CEO, PropEquity said, “The decline in supply is a result of cautious approach and shifting priorities by developers. Financially robust developers with strong balance sheet look to launch premium homes in order to increase their profit margin. As a result, supply of homes under Rs. 50 lakh has seen a consistent decline due to its unviability. Meanwhile, homes priced between Rs. 1-2 crore have not only seen a 17 percent Y-o-Y growth in supply but also its supply share increasing from 18 percent to 23 percent.”

“With home loan rates hovering around 8-8.5 percent, 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 Rs. 50Lakh-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 government’s focus on making these cities as growth drivers will enable end-user demand.”

Price-wise supply trend:

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

The supply of units priced under Rs. 50 lakh, more than halved to 7124 units in Q1 2025 as against 15420 units in the same period last year.  Its share to total supply fell from 33 percent to 24 percent in Q1 2025.

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

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

Supply of units priced Rs. 2 crore and above dipped by 73 percent in Q1 2025 and its share dipped from 13 percent to 5 percent in Q1 2025.

State Capitals saw 90 percent drop in supply of units priced under Rs. 50 lakh and 13 percent drop in supply of units priced between Rs. 50 lakh – Rs. 1 crore in Q1 2025. However, supply of units priced between Rs. 1-2 crore rose by 31 percent.