India’s housing story is no longer being written only in its biggest metros. A quieter but steady shift is unfolding in Tier-2 cities, where homebuyers are chasing space, affordability, and a better quality of life. Cities such as Ayodhya, Rishikesh, Lucknow, Sonipat, and Karnal are emerging as strong alternatives to traditional urban centres like Delhi, Mumbai, and Bengaluru.
The numbers reflect this changing mood. Housing sales across 30 Tier-2 markets touched 2.08 lakh units in FY 2023–24, an 11 percent rise over the previous year. In value terms, the top 15 smaller cities recorded a 20 percent jump, crossing Rs. 1.52 lakh crore. Developers are also voting with their land banks. About 44 percent of the 3,294 acres acquired in 2024 were in Tier-2 and Tier-3 locations, according to industry data compiled by ANAROCK and PropEquity.
Behind this surge is a changing buyer profile. Young professionals, first-generation entrepreneurs, and NRIs are increasingly looking beyond crowded metros. Many want larger homes at more reasonable prices. Others are seeking second homes for long stays, work-from-anywhere routines, or quiet retirement plans. Affordability remains the strongest pull. A home that may cost Rs. 1.5 crore to Rs. 2 crore in a Tier-1 city can often be bought for 40 to 50 percent less in cities like Sonipat, Ayodhya, Lucknow, or Karnal, while still offering more space and greener surroundings.
This shift is especially visible in the growing second-home market, now estimated at around $3 billion. Faster expressways, new regional airports, and upgraded rail networks are shrinking distances. Buyers from Delhi-NCR and even Mumbai can now seriously consider hill-edge towns and spiritual centres for weekend or extended stays.
Ayodhya stands out as one of the most dramatic examples of this new-age demand. Since the inauguration of the Ram Temple, the city’s real estate market has accelerated sharply. Land prices have reportedly risen between 400 and 600 percent since 2019, while circle rates have been revised upward by nearly 200 percent. The January–March quarter of 2024 alone saw a 186 percent year-on-year rise in property demand. What was once a quiet temple town is fast turning into a national and global spiritual destination, with hotels, rental housing, and residential projects mushrooming across the city.
“Ayodhya and Rishikesh’s growth today is not speculative, it’s structural,” said Sakshee Katiyal, Chairperson, Home & Soul. “These cities are becoming global spiritual destinations. Buyers want homes that carry emotional meaning as well as long-term investment stability. Much of this interest is from domestic buyers and NRIs who see strong rental potential from religious tourism.”
Rishikesh tells a different but equally compelling story. Known for its river views, yoga culture, and wellness tourism, the city has gained from improved connectivity along the Delhi–Dehradun corridor. Rental demand here rose 16 percent in 2024, while average property prices now hover around Rs 6,648 per sq. ft. Buyers are drawn not only by affordability, but by the promise of mental clarity, cleaner air, and a slower pace of life that metros struggle to offer.
Closer to Delhi, NCR-linked cities like Sonipat and Karnal reflect another layer of Tier-2 demand. These markets are seeing rising interest in plotted developments, integrated townships, and mid-segment apartments. The Northern Zone recorded an 8 percent increase in housing sales during FY 2023–24, supported by industrial growth and large infrastructure projects.
“Panipat, Sonipat and Karnal offer what metros increasingly struggle to provide: space, liveability and affordability,” said Sehaj Chawla, Managing Director of TREVOC Group. “People want broader roads, cleaner surroundings, and communities where daily life is convenient. With projects like the Urban Extension Road-II and the KMP Expressway, these cities have become practical extensions of the capital region without the financial and lifestyle strain of the metros.”
A similar evolution is underway in Dehradun and nearby markets. “Dehradun has moved from being a seasonal property market to a full-fledged residential hub,” said Harvinder Singh Sikka, Chairman, Sikka Group. “Tourism, NRI demand, and improved connectivity are reshaping the city. Buyers today are lifestyle-led. They want greenery, calm, and urban comfort at far lower prices than metro cities.”
Lucknow, meanwhile, continues to deepen its identity as the cultural and administrative capital of Uttar Pradesh while also emerging as a lifestyle destination. Young families, government employees, and second-home buyers from neighbouring districts are driving demand in the city’s expanding residential corridors. Plotted developments and low-density housing are gaining particular traction.
“In Lucknow, buyers are moving toward plotted, vacation-style communities that offer greenery and open spaces,” said Preksha Singh, CEO of Agrasheel Infratech. “There is a clear preference for low-density living with privacy and flexibility to design homes. This is especially visible along New Jail Road, where planned townships are taking shape with good access to the airport, hospitals, and retail hubs.”
Taken together, these cities reveal the full contours of India’s Tier-2 housing evolution. Ayodhya’s spiritual magnetism, Rishikesh’s wellness-led living, Lucknow’s cultural gravity, and Sonipat–Karnal’s infrastructure-backed convenience reflect different but equally powerful drivers of demand. Rising incomes, urbanisation, and supportive policy measures are strengthening this shift.
Industry estimates suggest that annual housing demand in Tier-2 and Tier-3 markets could double to one million units by 2047. Property prices across these regions are expected to grow at 5 to 10 percent annually over the next few years, driven by buyer aspiration and steadily improving physical connectivity. What began as a search for affordability is now becoming a broader re-imagining of how and where India chooses to live.
