Why Tier 2 Cities Are Winning the Homeownership Game
kabeer murugkar • September 17, 2025
Not all homes are created equal. Not because of the paint shade or the fancy floor tiles, but because of where they stand. A recent HomeFirst study put this under the microscope, asking: what does homeownership really do for families in different parts of India? We spoke to 280 households across 10 cities, crunching numbers and listening to stories.
One of the insights that came back loud and clear was that the Tier 2 and Tier 3 cities are where the magic happens.
Tier 1 homeowners may have the buzz of metros or skyscrapers, but they’re also drowning in bills. Between monster EMIs, skyrocketing maintenance, and the joyless expense of everyday living, financial breathing room is rare.
Out of 31 families who told us homeownership actually increased their financial stress, 58% were from Tier 1. It’s the classic big-city squeeze: spend more just to stay afloat.
Meanwhile in Tier 2 towns, families are flexing their gains. Half of them reported higher incomes after buying a home, and 56% said their savings grew. Part of this is a natural human trajectory–once the foundation of stability is laid, people climb faster–but it’s also about geography. Lower cost of living plus extra income from family businesses or local gigs equals a healthier bank account and a lighter heart.
With money on their side, it opens them up to the other necessary social wins. Tier 2 homeownership came with a lifestyle upgrade–better access to infrastructure, services, and local amenities. Families told us they were simply living better: schools nearby, healthcare within reach, shorter commutes, and communities that don’t demand an arm and a leg to keep up with.
And the larger story checks out. Living in a Tier 2 city is 30 to 35 percent cheaper than in a metro. That means you don’t need Mumbai’s paycheck to enjoy Mumbai’s lifestyle, because places like Indore, Jaipur, and Nagpur let you live it on friendlier terms. Add in growing infrastructure and untapped potential, and it’s no surprise families aren’t planning big moves anytime soon. Most told us they’re perfectly comfortable staying put for the next five to ten years.
For first-time homeowners, Tier 2 is the sweet spot. It’s where a house definitely brings savings, growth, and a better quality of life. The metros may keep their skyscrapers; the future, it seems, belongs to Tier 2.
To read the full report click here.
