A report by real estate consultant Square Yards said tier two and tier three cities are expected to drive the next growth cycle in the housing market as demand in big cities has been affected by a surge in home prices after the pandemic. It said affordability across major cities had been severely impacted by a price rally during 2022–24. The report added that limited new supply of affordable and mid-income homes in the seven major cities — Mumbai Metropolitan Region, Pune, Bengaluru, Delhi-NCR, Hyderabad, Chennai and Kolkata — had compounded the problem. The report observed that in several tier one corridors price growth had outpaced income expansion, causing affordability compression and tempering incremental demand at higher ticket sizes. It said emerging cities offered a more sustainable growth configuration with lower entry ticket sizes and stronger price-to-income alignment, creating a more accessible ownership landscape. Employment expansion beyond metros was broadening the residential demand base and housing demand in smaller cities remained largely end-user driven. Square Yards projected that the 2026–2028 residential cycle was unlikely to mirror the speculative premium surge of the recent past and was instead likely to be employment-backed, affordability-aligned and geographically diversified, marking a decisive recalibration of India's housing growth trajectory. The firm's founder and chief executive, Tanuj Shori, was reported to have noted that several major tier one markets had entered a too-premium-to-afford phase as sustained price appreciation over recent years had pushed affordability under visible strain. He pointed out that new home supply in the affordable segment had declined steadily, limiting small-ticket investment options for end-users and investors alike. The report listed Bhubaneswar, Cuttack, Erode, Puri, Varanasi and Visakhapatnam as cities poised to spearhead the next growth cycle. It said that, considering tier one cities were now largely saturated with limited scope for future growth, unlocking new growth territories was of utmost importance to maintain large-scale activity in the country's second-largest employment-generating sector. Observers will watch whether employment-led demand in these smaller cities can sustain balanced price growth and translate into stable project flows.