Housing Sales Decline in Tier II Cities: PropEquity

New Delhi, Oct 21 (PTI) Housing sales across 30 major tier-II cities fell 13 per cent to 41,871 units during July-September period on higher base effect and drop in new supply, according to PropEquity.

Data analytic firm PropEquity, which is part of listed entity P E Analytics Ltd, on Monday released the housing report of top 30 tier II cities.

Sales in top 30 tier-II cities have fallen by 13 per cent in July-September quarter of 2024 while new launches have declined by 34 per cent.

Housing sales fell to 41,871 units in the third quarter of 2024 calendar year as against 47,985 units in the same period last year.

Launches (new supply) fell to 28,980 units in July-September quarter of 2024 from 43,748 units in the same period last year.

The west zone comprising Ahmedabad, Vadodara, Gandhinagar, Surat, Goa, Nashik and Nagpur, contributed 72 per cent to the total sales.

Commenting on the data, Samir Jasuja, CEO & Founder, PropEquity said, "The 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."

Commenting on the report, Shashank Vashishtha, Managing Director, Exp Realty India, said, the housing market remains resilient despite fall in sales during September quarter. "These adjustments reflect a natural recalibration, offering homebuyers an opportunity as developers emphasise sustainable growth and affordability," Vashishtha added.

He expects strong sales in the current festive quarter.

Rochak Bakshi, Founder and CEO of True North Financial Services, said, real estate investment has historically not been very lucrative in tier II cities.

"Despite the growth in connectivity and infrastructure, these cities have failed to generate the kind of return that will attract investors. 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," Bakshi said.