Mumbai: India’s real estate market in Tier-2 cities saw major changes in 2025. High demand for expensive homes is changing buyer behaviour. Total real estate sales in Tier-2 cities touched about Rs 1.48 lakh crore. However, due to rising prices, the number of homes sold dropped by nearly 10 percent.
According to a PropEquity report, Ahmedabad has emerged as a new real estate powerhouse. Strong demand and supply numbers helped Ahmedabad move ahead of the Tier-2 category and enter the Tier-1 city league.
Sales Performance Across Cities
Some cities saw sharp declines in home sales. Visakhapatnam recorded the biggest fall of 38 percent. Bhubaneswar saw a 25 percent drop, while Vadodara recorded a 19 percent fall.
However, Mohali and Lucknow performed better. Mohali saw sales grow by 34 percent, while Lucknow saw a 6 percent increase.
Demand Shifts Towards Premium Homes
The housing market is slowly shifting towards expensive homes. Sales of houses priced below Rs 1 crore fell by 15 percent. Their market share dropped from 77 percent in 2024 to 72 percent in 2025.
At the same time, homes priced above Rs 1 crore saw a 9 percent rise in sales. Their market share increased from 23 percent to 28 percent. This shows buyers are now more interested in premium properties.
Ahmedabad Joins Tier-1 City Category
By early 2026, Ahmedabad is now being seen as a Tier-1 city. In both new project launches and home sales, Ahmedabad has performed better than many established Tier-1 cities. Strong infrastructure growth and high housing demand helped this transition.
New Housing Supply Falls In 2025
New housing supply in the top 15 Tier-2 cities fell by 6 percent in 2025. Around 1.36 lakh units were launched compared to 1.45 lakh units in 2024. Supply dropped across all price categories. Affordable housing supply fell by 5 percent, while premium housing supply dropped by 8 percent.
Gujarat Shows Strong Market Dominance
Gujarat continued to dominate real estate launches. Four cities -Ahmedabad, Vadodara, Surat and Rajkot - together contributed 64 percent of total housing launches in 2025.
Experts say young buyers are now moving to smaller cities due to better lifestyle, infrastructure and connectivity. Cities like Indore and Bahadurgarh are becoming popular housing choices.
