Housing sales across top 30 Tier 2 cities fell by 13% in the July-September quarter of 2024 while new launches declined by 34%, according to a new report released by real estate data analytics firm PropEquity on October 21.
Housing sales fell to 41,871 units in Q3 2024 against 47,985 units in the same period last year, while launches plummeted to 28,980 units during the three-month period 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% to the total sales, it said.
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โThe 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,โ said Samir Jasuja, CEO and founder, PropEquity.
West zone tops sales and launches
According to the report, the top three cities that witnessed maximum drop in launches were Sonepat, Panipat and Agra. Only eight cities saw growth in new launches with the top three being Bhopal (268%) followed by Dehradun (100%) and Coimbatore (77%).
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The west zone reportedly contributed 71% to the total launches.
Jaipur, Goa, Bhubaneshwar, Kochi and Mysore saw fall in launches while Lucknow, Mohali, Bhopal recorded a rise. These cities saw drop in sales between 3 – 61%, the report showed.
Among state capitals, Bhopal witnessed the maximum rise in new launches at 268% while Trivandrum saw maximum decline at 87%. Similarly, Dehradun saw maximum rise in sales at 47% while Bhubaneswar and Chandigarh saw maximum decline in sales at 18% each, it showed.
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โReal 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,โ said Rochak Bakshi, founder and CEO of True North Financial Services, adding that 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.
