Residential Real Estate Slump Reaches Tier-2 and Tier-3 Cities
Steep Decline in Housing Demand
A recent study by Assocham reveals that the slump in the residential real estate sector, initially affecting tier-1 cities, has now extended to tier-2 and tier-3 cities. The period between February and July of the current financial year saw a significant 25% drop in housing demand in smaller cities. This downward trend is primarily attributed to the higher cost of borrowing.
Key Findings of the Assocham Study
- Real Estate Transaction Decline: A nearly 25% decrease in realty transactions was observed in most tier-2 and tier-3 cities from February to July.
- Impact on Potential Buyers: Approximately fifteen million people in these cities have been unable to make purchases due to higher inflation and interest rates, which have dampened their enthusiasm and eroded their budgets.
Insights from Industry Stakeholders
- D.S. Rawat, Assocham Secretary General, noted, "Approx fifteen million people in tier-2 and tier-3 cities were unable to make purchases as higher inflation and interest rate have dampened their enthusiasm and eroded their budget."
Study Basis
The Assocham study is grounded in feedback from prominent real estate developers, including:
- Parsvnath
- Omaxe
- DLF
- Unitech
- BPTP
These developers are actively engaged in project development across small towns, providing firsthand insights into the market dynamics.