The ₹50 Lakh Home: Now an Endangered Species in Tier 2 India?

Image Source: The Economic Times

Acquiring a new home within ₹50 lakh in India's tier 2 cities is tougher than ever. According to fresh numbers from PropEquity, housing supply in the top 15 tier 2 cities fell 35% in the first quarter of 2025, with affordable housing suffering the maximum damage. The number of new homes available for less than ₹50 lakh more than halved, falling 54% to just 7,124 units from more than 15,000 units a year earlier.

Key Highlights:

Sharpest Decline in Affordability Segment: The percentage of houses under ₹50 lakh fell to 24% of overall supply from 33%. State capitals were hit even harder, with a staggering 90% drop in sub-₹50 lakh launches.
Regional Trends: The decline was sharpest in Bhubaneswar with new supply falling 72%. The sharpest fall was in Eastern and Central India with the new launches falling 68%, followed by Northern India down 55%, Western 28%, and Southern 26%.
Developers Target Premium: Developers are focusing on premium projects in order to get the highest margins, affordable housing becoming a less attractive option, say analysts. Properties priced between ₹50 lakh and ₹1 crore now account for almost half of all new launches, and ₹1–2 crore house supply is also increasing.
Interest Rate Impact: With 8–8.5% home loan rates, the recently announced 50 basis point RBI repo rate cut is expected to revive demand once again, but focus remains on mid- and high-end residential segment.
Future Prospects: Experts say tier 2 cities still have good long-term prospects, considering infrastructure is expanding and the government is promoting growth. However, currently, homebuyers looking for homes in the ₹50 lakh and below segment will not have many options.