In line with the trends seen in tier 1 cities, housing sales in top-30 tier-2 cities fell by 13 per cent in the July-September 2024 quarter and new launches declined 34 per cent, according to a report by NSE-listed real estate data analytics firm PropEquity.
Housing sales fell to 41,871 units in Q3 2024 against 47,985 units in the same period last year while launches fell to 28,980 units in July-September quarter of 2024 from 43,748 units in the same period last year, the report said.
The west zone comprising Ahmedabad, Vadodara, Gandhinagar, Surat, Goa, Nashik and Nagpur, contributed 72 per cent to the total sales.
Samir Jasuja, CEO and founder of PropEquity, said, “The decline in sales and launches is on account of higher base effect as year 2023 had recorded historic highs. The low cost of living, availability of skilled workforce and advantageous operational cost for companies besides good connectivity and infrastructure in State Capitals have been driving demand for homes. However, as seen from an all-India context, the top-30 tier-2 cities have been underperforming as sales and launches with respect to top ten cities are only 1/3.”
According to the report, the top three cities that witnessed maximum drop in launches were Sonepat, Panipat and Agra. Only 8 cities saw growth in new launches with top three being Bhopal (268%) followed by Dehradun (100%) and Coimbatore (77%).
West Zone contributed 71% to the total launches.
Shashank Vashishtha, managing director of Exp Realty India, said, “Despite a recent report by PropEquity highlighting a decline in housing sales, the real estate market remains resilient. These adjustments reflect a natural recalibration, offering homebuyers an opportunity as developers emphasise sustainable growth and affordability. With the festive season in full swing, a revival in buyer sentiment is anticipated, with developers introducing attractive offers and competitive pricing to cater to evolving demand.”
This slowdown also gives end-users more time to explore their options, ensuring better long-term investments in thriving tier-2 markets. While short-term declines are apparent, the broader market fundamentals remain strong, encouraging future growth and stability, he added.
Lt. Col. Rochak Bakshi (Retd.), founder and CEO of True North Financial Services, said, “Real estate investment has historically not been very lucrative in tier 2 cities. Despite the growth in connectivity and infrastructure, these cities have failed to generate the kind of return that will attract investors. The cost of managing a property combined with poor rental yields, not-so-great appreciation in capital value and highly illiquid nature make investment in these cities highly risky. Unless required for end-use, investors must opt out of tier 2 cities and instead invest in more liquid and return-generating instruments like mutual funds,PMS etc.”
These investments would not only give higher returns but also peace of mind as one dent have to be hands on unlike property where active management is needed, he added.
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