Tier-II India Housing Supply Drops 35% in 2025

India's top 15 tier-II cities saw a 35% year-on-year decline in new housing supply in the first quarter of 2025, dropping to 30,155 units as developers shifted their focus from affordable to premium homes. The affordable housing segment, defined as homes priced under Rs 50 lakh, experienced a sharper 54% drop, reflecting developers' growing preference for higher-margin properties. The premium housing segment, now defined as homes priced between Rs 1–2 crore, has seen increased supply due to rising input costs, selective demand, and tighter funding. Major cities such as Ahmedabad, Surat, and Jaipur recorded significant decreases in new launches, with Bhubaneshwar experiencing the steepest decline at 72%, while Nashik saw only a 2% drop. Regional contractions were largest in Eastern and Central India at 68%. Industry experts suggest that policy rate cuts and stable home loan rates may support mid-priced housing demand despite the ongoing shift.