Tier-2 Housing Sales Drop 10% in 2025,Visakhapatnam, Bhubaneswar, and Vadodara Cities See Sharp Fall

India’s Tier-2 housing sales recorded a notable slowdown in 2025, declining 10% year-on-year across the country’s top 15 Tier-2 cities. The drop signals a cooling phase in markets that had previously witnessed strong post-pandemic momentum. Cities such as Visakhapatnam, Bhubaneswar, and Vadodara were among the worst affected, experiencing steep declines in housing absorption.

The moderation in Tier-2 housing sales reflects shifting buyer preferences, affordability pressures, and a visible move toward higher-priced properties.

Sharp Decline in Key Tier-2 Cities

Among the 15 Tier-2 cities tracked, housing demand weakened considerably in 2025. Visakhapatnam, Bhubaneswar, and Vadodara saw the sharpest corrections in annual sales volumes. Analysts attribute the decline in Tier-2 housing sales in these markets to rising property prices and limited availability of affordable homes.

While demand remains structurally intact, absorption levels have slowed as buyers reassess affordability amid increasing property costs.

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Cities That Bucked the Trend

Not all markets followed the broader slowdown. Mohali recorded a strong 34% year-on-year growth in housing sales, emerging as the top-performing Tier-2 market. Similarly, Lucknow posted a modest 6% increase in sales volume.

These cities benefited from infrastructure upgrades, improved connectivity, and relatively stable pricing, helping them sustain momentum even as overall Tier-2 housing sales declined nationally.

Growing Shift Toward High-Value Homes

A significant shift in buyer preference reshaped Tier-2 housing sales in 2025. Homes priced below ₹1 crore witnessed a 15% year-on-year decline in sales volumes, with their market share falling from 77% in 2024 to 72% in 2025.

In contrast, homes priced above ₹1 crore saw a 9% increase in sales, with their share rising to 28%. This transition highlights a structural change in Tier-2 housing markets, where aspirational buying and rising incomes are pushing demand toward premium segments.

However, the contraction in affordable housing supply has directly impacted overall Tier-2 housing sales, traditionally driven by mid-income buyers.

New Supply Declines Across Segments

Supply trends also mirrored the slowdown. New housing launches across the top 15 Tier-2 cities declined 6% in 2025, falling to 1,36,243 units from 1,45,139 units in 2024.

Supply of homes under ₹1 crore dropped 5%, while units priced above ₹1 crore fell 8%. The decline in launches further constrained Tier-2 housing sales, especially in price-sensitive segments.

Cities such as Mohali (108% growth), Bhopal (66%), Ahmedabad (3%), and Jaipur (2%) saw an increase in launches. However, the remaining 11 cities recorded declines, with Bhubaneswar witnessing the steepest fall. Notably, four Gujarat cities together accounted for 64% of total launches in 2025.

Ahmedabad’s Transition Toward Tier-1 Status

From 2026 onward, Ahmedabad is increasingly being viewed as a Tier-1 city due to its scale of development and depth of housing demand. The city has surpassed several established Tier-1 markets in both new launches and absorption levels.

This transformation reflects the evolving nature of Tier-2 housing sales, where certain cities are rapidly expanding beyond traditional classifications.

What Experts Say About the Slowdown

Industry experts suggest that the moderation in Tier-2 housing sales is largely linked to shrinking availability of sub-₹1 crore homes. Rising land prices, increasing construction costs, and changing buyer aspirations have pushed developers toward higher ticket-size projects.

As Tier-2 cities attract stronger infrastructure investment, including industrial corridors and improved urban connectivity, average property prices have crossed the ₹1 crore threshold in many markets. While this has driven capital appreciation, it has also created affordability challenges that are slowing absorption.

The trend indicates that Tier-2 markets are increasingly mirroring Tier-1 cities, where volumes soften even as property values continue to rise.

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Outlook for 2026

Going forward, the trajectory of Tier-2 housing sales will depend on how developers address affordability concerns. If supply in the mid-income and affordable segments remains constrained, absorption could remain under pressure.

However, strong infrastructure development, industrial expansion, and economic growth in Tier-2 cities may continue supporting long-term housing demand. Policymakers and developers will need to strike a balance between aspirational housing and accessible pricing to sustain momentum.

Conclusion

The 10% decline in Tier-2 housing sales in 2025 marks a period of recalibration for India’s emerging real estate markets. While cities like Visakhapatnam, Bhubaneswar, and Vadodara faced sharp corrections, others such as Mohali and Lucknow demonstrated resilience.

The shift toward higher-priced housing, combined with shrinking affordable supply, has reshaped the Tier-2 landscape. Whether this slowdown represents a temporary adjustment or a longer structural shift will become clearer in 2026 as market dynamics continue to evolve.