Rising Costs, Changing Demand Slow Down New Housing Supply In India’s Tier-II Markets

Real estate data analytics firm PropEquity said the new supply stood at 45,901 units in the first quarter of 2024 calendar year.

Gandhinagar saw a decline of 10 per cent in housing supply to 4,356 units from 4,825 units during the period under review.

Source : Freepik

India's 15 major tier-II cities witnessed a 35 per cent fall in new supply of housing properties to 30,155 units during January-March, according to PropEquity.

Real estate data analytics firm PropEquity said the new supply stood at 45,901 units in the first quarter of 2024 calendar year.

Samir Jasuja, Founder and CEO of 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 per the data, new housing supply in Ahmedabad fell 35 per cent to 11,096 units during January-March 2025 from 17,108 units in the year-ago period.

Gandhinagar saw a decline of 10 per cent in housing supply to 4,356 units from 4,825 units during the period under review.

Fresh housing supply slipped 39 per cent in Surat to 3,309 units from 5,439 units.

In Nashik, the new supply decreased 2 per cent to 2,466 units from 2,509 units.

Vadodara saw a 23 per cent fall to 2,149 units from 2,790 units, while Jaipur witnessed a 55 per cent decline to 1,348 units from 2,997 units.

New supply in Lucknow fell to 1,026 units from 2,256 units.

In Nagpur, the supply of new homes went down 28 per cent to 1,036 units from 1,432 units.

Bhubaneshwar saw a steep decline of 72 per cent to 772 units from 2,804 units.

In Goa, the fall was 24 per cent to 444 units from 587 units.

New supply of residential properties in Bhopal decreased 51 per cent to 365 units from 738 units.

Mangalore saw a 64 per cent reduction to 269 units from 753 units.

In Kochi, the new supply diminished by 49 per cent to 225 units from 437 units.

Trivandrum saw a 71 per cent drop to 217 units from 751 units.

However, new homes supply in Coimbatore jumped to 1,077 units in January-March this year from 475 units in the year-ago period.

"The supply dip in tier-2 cities is largely a result of developers recalibrating their launch pipelines amid rising input costs, tighter funding, and selective demand in these markets," Rajat Khandelwal, Group CEO of Tribeca Developers, said.

Kirthi Chilukuri, Founder & MD of Stonecraft Group, said, "The decline in housing supply across tier-2 cities in Q1 2025 marks a turning point, one that holds immense potential for forward-thinking developers. At Stonecraft Group, we view this as an opportunity to pioneer sustainable, biophilic design that not only meets the growing demand for high-quality housing but also fosters vibrant communities in harmony with nature." Vijay Harsh Jha, founder of VS Realtors, said that tier-2 cities are moving towards premiumisation as homes priced at Rs 1-2 crore have shown greater demand.

"However, the decline in Rs 50 lakh homes points to growing concern in view of these cities attracting a lot of people for jobs. The real estate sector, however, remains strong in these cities and a slowdown in supply is a temporary phenomenon," he added. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)