The supply of new affordable housing in India's top 15 tier-2 cities witnessed a steep decline of 54 per cent in January-March quarter (Q1) of the current year. This drop indicates a shrinking focus of developers on the affordable housing segment —which have properties priced under Rs50 lakh.
The housing supply in India's top 15 tier 2 cities fell by a whopping 35 per cent to 30,155 units in January-March period of 2025, with 48 per cent of the launches in the Rs50 lakh-1 crore price range.
The supply stood at 45,901 units with 36 per cent of the launches in price range Rs50L-1cr in Q1 2024.
Bhubaneshwar witnessed the highest decline at 72 per cent to 772 units in Q1 2025 while Nashik saw the least decline at 2 per cent to 2466 units.
Eastern and Central India, with 68 per cent fall in new launches in Q1 2025, saw the highest decline, followed by 55 per cent in Northern India, 28 per cent in Western India and 26 per cent in Southern India. The seven State Capitals in the top 15 tier 2 cities saw 43 per cent decline in supply in Q1 2025.
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 Rs50 lakh has seen a consistent decline due to its unviability, states PropEquity latest report.
Homes priced between Rs1-2 crore have seen a 17 per cent y-o-y growth in supply but also its supply share increased from 18 per cent to 23 per cent. With home loan rates hovering around 8-8.5 per cent, 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 Rs50L-2cr priced homes in tier 2 cities.
Housing units priced under Rs2 crore accounted for 95 per cent of the total supply in Q1 2025, up from 87 per cent in the same period last year. The supply of units priced under Rs50 lakh, more than halved to 7,124 units in Q1 2025 as against 15,420 units in the same period last year. Its share to total supply fell from 33 per cent to 24 per cent in Q1 2025.
Similarly, supply of units priced between Rs50 lakh and Rs1 crore dipped by 12 per cent and its share rose from 36 per cent to 48 per cent in Q1 2025. The supply of units priced between Rs 1-2 crore dipped by 17 per cent and its share rose from 18 per cent to 23 per cent in Q1 2025.
Supply of units priced Rs2 crore and above dipped by 73 per cent in Q1 2025 and its share dipped from 13 per cent to 5 per cent in Q1 2025. State Capitals saw 90 per cent drop in supply of units priced under Rs50 lakh and 13 per cent drop in supply of units priced between Rs50L-Rs1 crore in Q1 2025. However, supply of units priced between Rs1-2 crore rose by 31 per cent.
