New Delhi: India’s Tier-II and Tier-III cities are expected to drive the next growth cycle in the housing market as rising property prices in major metros have dented affordability, according to a report by Square Yards.
The report, titled ‘India’s Next Real Estate Growth Cycle: The Rise of Tier-2 and Tier-3 Cities’, noted that the sharp price rally during 2022–24 has significantly impacted home affordability in major metropolitan markets.
Limited supply of affordable and mid-income homes across key cities such as Mumbai Metropolitan Region, Pune, Bengaluru, Delhi-NCR, Hyderabad, Chennai and Kolkata has further aggravated the situation.
According to the consultant, housing prices in several Tier-I markets have risen faster than income growth, leading to reduced affordability and a moderation in demand, particularly for higher-ticket homes.
In contrast, emerging cities offer lower entry prices and better alignment between property values and household incomes, making home ownership more accessible.
The report noted that employment growth beyond metropolitan centres is expanding the residential demand base, with housing demand in smaller cities largely driven by end-users.
Tanuj Shori said many Tier-I markets have entered a “too-premium-to-afford” phase as sustained price increases have strained affordability.
He added that declining supply in the affordable housing segment has also limited options for buyers.
The report identified cities such as Bhubaneswar, Cuttack, Erode, Puri, Varanasi and Visakhapatnam as key markets likely to lead the next housing growth cycle. Agencies