Housing Boom: Top 30 Tier-II Cities See 11% Growth in FY24

In a notable surge, housing sales across India's top 30 tier-II cities rose by 11% during the fiscal year 2023-24, driven by robust economic growth, infrastructure development and increased aspirations for home ownership. According to PropEquity, a leading real estate data analytics firm, the total housing units sold reached 207,896, up from 186,951 units in the previous fiscal year.

Regional Highlights

Chandigarh Leads Growth: Chandigarh witnessed the highest jump in housing sales with an impressive 89% increase year on year, followed closely by Dehradun at 82% and Bhubaneswar at 58%.

Regional Distribution: Western India accounted for most of sales at 69%, followed by the south at 10.5%. Cities like Ahmedabad, Bhubaneswar, Nagpur, Surat and Jaipur saw increases in housing demand.

Sales Performance Across Regions

Western Zone

Western region, encompassing key cities like Ahmedabad, Vadodara, Surat, Nashik, Gandhinagar, Nagpur, and Goa, witnessed a rise with 144,269 residential units sold, marking an 11% increase from the previous fiscal year.

Northern Zone

In the northern zone, cities such as Jaipur, Mohali, Lucknow, Chandigarh, Dehradun, Agra, Ludhiana and Amritsar reported sales of 26,308 residential units, recorded an 8% uptick from the preceding year.

Southern Zone

In the south, cities like Visakhapatnam, Trivandrum, Coimbatore, Kochi, Vijayawada, Mangalore, Guntur, and Mysore saw sales reach 21,947 residential units, reflecting an 8.4% increase year on year.

Eastern & Central Zones

Meanwhile, the eastern and central zones, encompassing cities such as Bhubaneswar, Bhopal, Indore and Raipur reported a growth of 18% with 15,372 units sold in FY24.

Factors Driving Growth

• Economic Boom: Tier-II cities are experiencing a boom fueled by the growth of small and medium enterprises (SMEs) and government investments in infrastructure.

• Affordability and Potential: Lower property prices compared to tier-I cities make tier-II cities attractive for homebuyers, coupled with growth potential.

• Infrastructure Development: Government initiatives to improve infrastructure are enhancing connectivity and livability further boosting real estate demand.
Industry Insights

Samir Jasuja, PropEquity said Tier-II cities outperformed tier-I cities due to lower property costs and economic growth, creating a bullish real estate environment. Manish Jaiswal, Eldeco added the rise in housing sales highlights urban transformation driven by enhanced infrastructure and evolving consumer preferences toward premium housing.

A Flashback Story of 2023

According to data from ANAROCK, a leading real estate consultancy firm, top seven cities in India witnessed a dramatic 31% increase in housing sales in 2023, reaching a total of approximately 4.76 lakh units sold. This surge in sales is a rebound from the previous year and marks the highest level of activity in the housing market since 2014.

Among these cities, Mumbai stood out as the leader, with around 1,53,870 units sold, making it the city with the highest number of sales. Pune came in second, with 86,680 flats sold. Other top cities which included Delhi NCR, Bengaluru, Chennai, Hyderabad, Kolkata and Pune all saw an increase in housing sales compared to 2022.

2023 saw a total of 4,76,530 units sold across these top cities, compared to 3,64,870 units in 2022. This growth highlights a rebound in the housing sector, especially after the slight peak observed in 2022 when around 3.43 lakh units were sold across these cities, the highest figure since 2014. One of the most striking trends in 2023 was the dramatic rise in demand for luxury housing driven by a desire for larger spaces and better amenities post pandemic, propelling new luxury housing supply to five times the levels seen in 2018.

In terms of city specific performance, MMR witnessed a 40% annual increase in housing sales, while Pune saw an impressive 52% jump over 2022. National Capital Region (NCR) recorded the sale of approximately 65,625 units, marking a modest 3 % growth from 2022. Bengaluru also showed strong performance with 63,980 units sold, reflecting a 29% increase from the previous year. Hyderabad followed with 61,715 units sold, a 30% rise while Chennai saw 21,630 units sold indicating a 34% increase. Kolkata recorded a more modest 9% growth with 23,030 units sold.

New Launches

2023 was also marked by an increase in new housing launches. A total of around 4,45,770 units were introduced to the market in the top seven cities, representing a 25% increase from the 3,57,640 units launched in 2022. MMR and Pune were the leading regions for these new launches, together accounting for nearly 54% of the total new housing supply in 2023.

In terms of pricing and housing segments, majority of new housing supply was concentrated in the mid to high end price brackets. Approximately 31% of new units were priced between ₹40 lakh and ₹80 lakh, while 28 % fell into the ₹80 lakh to ₹1.5 crore range. Another 23 % of new housing units were priced above ₹1.5 crore. Affordable housing, defined as units costing up to ₹40 lakh constituted the smallest segment at just 18% of the new supply.

NCR also saw 45 % increase in new housing launches, with 36,735 units introduced in 2023. Interestingly, over 51% of these new units were priced between ₹40 lakh and ₹2.5 crore indicating a strong market for mid range and premium housing in the region.

Conclusion

The growing demand and favorable market conditions make the future of real estate in tier-II cities very promising. With ongoing infrastructure development and changing consumer preferences, the housing market in these areas is expected to keep growing. This trend highlights not only the economic strength of these cities but also the changing desires of urban residents who are seeking better living spaces in emerging urban centers. As these cities expand, their role in the national real estate market becomes important.