Affordable Housing: Supply Plummets in Tier 2 Cities – Q1 2025
- The availability of new affordable housing in India's 15 leading tier 2 cities experienced a significant decrease, falling 54% in the first quarter of 2025.
- Affordable housing is defined as properties priced below 5 million rupees.
- In the first quarter of 2024, the supply totaled 45,901 units, wiht 36% priced between 5 million and 10 million rupees, according to PropEquity data.
India’s tier 2 cities witnessed a dramatic 54% plunge in the availability of affordable housing in Q1 2025. Developers are shifting focus, showing a reduced emphasis on the primary_keyword.This report breaks down the cities most impacted, with Bhubaneshwar experiencing the steepest supply drop.While overall housing supply dipped, the report highlights a surge in properties priced between 50 lakh and 1 crore rupees, suggesting a shift in market dynamics. The analysis also discusses the impact of recent economic influences in the region. News Directory 3 provides comprehensive updates on real estate trends. Discover what’s next for the affordable housing market in these regions.
Affordable housing Supply Dips sharply in India’s Tier 2 Cities
Updated June 15, 2025
The availability of new affordable housing in India’s 15 leading tier 2 cities experienced a significant decrease, falling 54% in the first quarter of 2025. This decline signals a reduced emphasis on the affordable housing segment by developers.
Affordable housing is defined as properties priced below 5 million rupees. A report by PropEquity, a real estate data analytics firm, indicated that overall housing supply in these cities dropped 35% to 30,155 units during the January-March period. Notably, 48% of new launches fell within the 5 million to 10 million rupee price range.
In the first quarter of 2024, the supply totaled 45,901 units, wiht 36% priced between 5 million and 10 million rupees, according to PropEquity data. Bhubaneshwar saw the most substantial decrease, with a 72% drop to 772 units in Q1 2025. Nashik experienced the smallest decline, at 2%, with 2,466 units.
Eastern and Central India recorded the largest decrease in new launches,with a 68% fall in Q1 2025. Northern India followed with a 55% decline, while Western and Southern India saw decreases of 28% and 26%, respectively. The seven state capitals within the top 15 tier 2 cities experienced a 43% reduction in supply during the same period.
samir Jasuja,founder and CEO of PropEquity,said the decline reflects a shift in developer priorities. ”Financially robust developers with strong balance sheets look to launch premium homes in order to increase their profit margin. As an inevitable result, supply of homes under Rs 50 lakh has seen a consistent decline due to its unviability,” Jasuja said.
Jasuja added that homes priced between 10 million and 20 million rupees have seen a 17% year-over-year growth in supply, with their share increasing from 18% to 23%.
According to Jasuja, a recent 50-basis-point reduction in the repo rate by the Reserve Bank of India, coupled with home loan rates around 8% to 8.5%, will likely further reduce home loan rates, boosting demand for homes priced between 5 million and 20 million rupees in tier 2 cities.
“The tier 2 cities present a huge prospect for corporates and developers as massive infrastructure development and government’s focus on making these cities as growth drivers will enable end-user demand,” Jasuja said.
Housing units priced under 20 million rupees accounted for 95% of the total supply in Q1 2025, up from 87% in the same period last year. The supply of units priced under 5 million rupees more than halved to 7,124 units in Q1 2025, compared to 15,420 units in the same period last year. Its share of the total supply fell from 33% to 24%.
similarly, the supply of units priced between 5 million and 10 million rupees dipped by 12%, but its share rose from 36% to 48% in Q1 2025. The supply of units priced between 10 million and 20 million rupees dipped by 17%, but its share rose from 18% to 23% in Q1 2025. The supply of units priced at 20 million rupees and above dipped by 73% in Q1 2025,and its share dipped from 13% to 5%.
State capitals saw a 90% drop in the supply of units priced under 5 million rupees and a 13% drop in the supply of units priced between 5 million and 10 million rupees in Q1 2025. Though, the supply of units priced between 10 million and 20 million rupees rose by 31%, the report added.
what’s next
Industry observers will be watching closely to see if government incentives or policy changes can reverse the decline in affordable housing supply and ensure that housing remains accessible to a wider range of income levels in India’s rapidly developing tier 2 cities.