Affordable Housing Revolution: How PMAY is Shaping Real Estate in Tier 2 and 3 Cities

While Tier 1 cities still face challenges of high land costs and limited space, Tier 2 and 3 cities offer a unique opportunity: ample land, lower construction costs, expanding infrastructure, and increasing aspirations. These factors, combined with government incentives and schemes under PMAY, are transforming smaller cities into real estate growth engines.

PMAY: Transforming the Landscape of Affordable Housing

Launched in 2015, Pradhan Mantri Awas Yojana (Urban) aims to provide pucca houses to all eligible urban households by 2022 (now extended in phases). The scheme offers credit-linked subsidies on home loans, making homeownership more affordable for economically weaker sections (EWS), low-income groups (LIG), and even some middle-income segments (MIG-I and MIG-II).

Key features include:

• Subsidized interest rates: Up to 6.5% subsidy on housing loans under Credit Linked Subsidy Scheme (CLSS)

• Focus on women ownership, differently-abled, and senior citizens

• In-situ redevelopment and affordable housing in partnership (AHP)

• Promotion of eco-friendly technologies and better quality housing

Over 1.2 crore houses have been sanctioned under PMAY-Urban as of 2024, with a significant portion located in Tier 2 and 3 cities where land and labor costs align better with affordability benchmarks.

Tier 2 and 3 Cities: The Epicenter of Affordable Housing Demand

In cities like Nagpur, Nashik, Bhopal, Lucknow, Madurai, Coimbatore, and Bhubaneswar, the combination of infrastructure development, growing employment opportunities, and lifestyle aspirations is creating a solid base for affordable housing.

Why these cities are thriving:

• Affordable land parcels: Developers can acquire larger plots at relatively low rates.

• Government support: Many state governments are offering extra incentives under PMAY such as stamp duty rebates or fast-track approvals.

• Infrastructure push: Smart Cities Mission, AMRUT, and better connectivity are making these cities more attractive for long-term settlement.

• Urban migration: Workers and middle-class families moving from rural areas prefer owning homes in smaller, affordable cities over renting in metros.

For instance, Indore and Bhopal in Madhya Pradesh have seen robust demand for MIG and LIG housing, while Coimbatore is witnessing a rise in plotted development under the PMAY framework.

Challenges in the Affordable Housing Segment

Despite the progress, challenges remain:

• Delays in subsidy disbursal from banks or government departments

• Inconsistent execution across different states

• Limited availability of land in growing urban zones

• Rising input costs for developers

To overcome these challenges, digital transformation and streamlined compliance mechanisms are essential—especially in fast-growing markets where scale and efficiency are critical.

Technology’s Role in Accelerating PMAY Goals

The future of affordable housing lies not only in construction but also in technology enablement. From tracking subsidy applications to simplifying project approvals and digitizing buyer journeys, technology can bridge the gap between policy and implementation.

In Tier 2 and 3 cities, where developers often lack access to premium tools and buyers need more hand-holding, PropTech platforms and real estate management software are revolutionizing the way affordable housing is discovered, purchased, and delivered.

HexaHome and Hexadecimal Software: Empowering Affordable Housing Growth

One of the leading names helping transform this space is HexaHome, a modern real estate discovery platform. HexaHome allows homebuyers—especially in Tier 2 and 3 cities—to easily explore PMAY-compatible properties, understand subsidy eligibility, and navigate the loan process with clarity. The platform ensures that affordable homes are not only accessible but also transparent in pricing, documentation, and delivery timelines.

Supporting this ecosystem is Hexadecimal Software, the technology partner behind HexaHome. Their PropTech solutions help developers manage project approvals, automate subsidy tracking, and streamline the buyer experience end-to-end. From digital site visits to online EMI calculators and real-time inventory updates, Hexadecimal Software is equipping developers and homebuyers with the tools needed to navigate the complex affordable housing ecosystem efficiently.

By bridging the information gap and introducing tech-led transparency, HexaHome and Hexadecimal Software are accelerating the impact of PMAY and affordable housing initiatives, especially in the heartland of India.

Conclusion

Affordable housing is no longer just a government promise—it is a fast-evolving reality in India’s smaller cities. With PMAY acting as the catalyst and digital innovation empowering stakeholders, Tier 2 and Tier 3 cities are poised to lead the next wave of inclusive real estate growth. Platforms like HexaHome, backed by Hexadecimal Software, are playing a crucial role in ensuring that the benefits of this housing revolution reach every aspiring homeowner across India’s expanding urban spectrum.