India’s Tier 2 cities are experiencing a mixed bag of trends in the real estate sector, with a decline in the number of housing units sold in Q1 2025, but a significant rise in the sales value. According to data from PropEquity, housing sales in the top 15 Tier 2 cities fell by 8%, totaling 43,781 units in Q1 2025, compared to 47,378 units during the same period last year. However, the total sales value increased by 6%, reaching ₹40,443 crore in Q1 2025, up from ₹38,102 crore in Q1 2024. While this reflects a drop in volume, the market is still showing strong value growth, especially in cities like Coimbatore and Lucknow. Let’s dive into the specifics of these shifts and what they mean for the housing market in Tier 2 cities.
Key Insights: Sales Dip But Value Grows
Despite the decline in the number of housing units sold, the sales value in Tier 2 cities has been on the rise. This reflects a trend where fewer units are sold, but they are of higher value, suggesting that buyers are opting for more premium properties.
- Overall Sales Decline: The number of units sold in Q1 2025 dropped by 8% compared to the previous year, totaling 43,781 units.
- Sales Value Growth: The total sales value in these cities increased by 6%, reaching ₹40,443 crore in Q1 2025, up from ₹38,102 crore in Q1 2024.
This dual trend of falling sales but rising value signals a shift in buyer preferences towards better-quality homes, likely driven by factors such as the demand for more organized living spaces and better amenities.
Lucknow and Coimbatore Lead in Growth
Among the 15 Tier 2 cities analyzed, Lucknow saw the highest growth in sales, with a 25% increase in units sold, from 1,040 in Q1 2024 to 1,301 in Q1 2025. Coimbatore followed closely with a 21% increase in sales, showing strong demand in these cities.
Key Growth Highlights:
- Lucknow: +25% in units sold (1,301 units in Q1 2025)
- Coimbatore: +21% in units sold
- Gandhinagar: +18% in units sold
- Mohali: +2% in units sold
These cities represent a shift in demand, as increasing numbers of people seek homes in areas with more affordable property options, yet still benefit from growing infrastructure and job opportunities.
Declines in Sales Across Other Tier 2 Cities
On the other hand, many other Tier 2 cities experienced a decline in housing sales. The largest drop was seen in Visakhapatnam, which registered a 37% fall in sales. Other cities like Jaipur, Nagpur, and Bhopal also faced notable declines, as summarized below:
- Visakhapatnam: -37% in units sold
- Jaipur: -32% in units sold
- Bhopal: -31% in units sold
- Nagpur: -21% in units sold
Cities like Ahmedabad and Goa had minimal declines of 1%, showing that some regions have held steady amidst broader market challenges.
Coimbatore Leads in Sales Value Growth
While many cities experienced a decline in the number of units sold, Coimbatore saw the highest growth in sales value at 52%, reaching ₹1,120 crore in Q1 2025. Other cities that saw impressive growth in sales value include:
- Lucknow: +48% in sales value
- Gandhinagar: +36% in sales value
- Mohali and Goa: +17% each in sales value
These figures indicate that while the number of transactions may be lower, the premium property segment in these cities is gaining momentum, reflecting the shift in buyer preferences towards higher-value homes.
Factors Driving Demand in Tier 2 Cities
Samir Jasuja, founder and CEO of PropEquity, highlighted that the demand in Tier 2 cities remains robust, driven by factors such as:
- Organized Living: There is a growing preference for organized and gated communities, which offer better amenities and a more structured living environment.
- Job Opportunities: Many Tier 2 cities are emerging as new IT and manufacturing hubs, which is attracting more residents, both local and those migrating from metro cities.
- Affordable Housing: Compared to metro cities, Tier 2 cities still offer relatively affordable housing, which continues to attract first-time homebuyers and investors alike.
Furthermore, the RBI’s recent 50 basis points cut in the repo rate since January 2025 is expected to reduce home loan interest rates, providing a further boost to housing demand.
Summary Table: Key Insights from Tier 2 Cities Housing Market (Q1 2025)
| Metric | Q1 2025 | Q1 2024 | Change |
|---|---|---|---|
| Units Sold (Top 15 Cities) | 43,781 | 47,378 | -8% |
| Sales Value (Top 15 Cities) | ₹40,443 crore | ₹38,102 crore | +6% |
| Lucknow Sales Growth | 25% increase | – | Highest Growth |
| Coimbatore Sales Value Growth | ₹1,120 crore (52%) | – | Highest Growth |
| Visakhapatnam Sales Decline | -37% | – | Largest Decline |
| RBI Repo Rate Cut | 50 basis points | – | Positive for Demand |
Quotes from Industry Experts
Samir Jasuja, CEO of PropEquity, explained, “The decline in sales in Tier 2 cities in Q1 2025 is consistent with trends in Tier 1 cities. However, the demand in these cities remains strong, especially with a preference for organized living and job opportunities in emerging sectors like IT and manufacturing.”
Jasuja further added, “With the RBI cutting interest rates, housing demand is likely to see an uptick, especially in Tier 2 cities, where affordability is a key factor.”
FAQs About Tier 2 Cities Housing Market
- Which Tier 2 city saw the highest growth in housing sales in Q1 2025?
Lucknow saw the highest growth, with a 25% increase in the number of units sold compared to Q1 2024. - What factors are driving demand in Tier 2 cities?
Demand is driven by the preference for organized living, emerging job opportunities in IT and manufacturing sectors, and the affordability of housing compared to metro cities. - Which city saw the highest increase in sales value?
Coimbatore experienced the highest increase in sales value, with a 52% rise, reaching ₹1,120 crore in Q1 2025. - What impact has the RBI’s repo rate cut had on the housing market?
The RBI’s 50bps cut in the repo rate is expected to lower home loan interest rates, which will further boost housing demand, especially in Tier 2 cities. - How did the housing market in Tier 2 cities perform in Q1 2025 compared to Q1 2024?
While the number of units sold declined by 8%, the sales value increased by 6%, reflecting a shift towards higher-value properties despite fewer transactions.