In 2021, there were more sales by of pre-owned apartment units and freestanding homes in the greater Tokyo area than ever recorded.
The number of sales contracts for pre-owned apartments in the Tokyo metropolitan area increased 11.1% year-on-year to 39,812, a record high. Last year was also the first time in two years since the number of sales contracts surpassed the previous year’s sales contracts. The previous record was set in 2019 when there were 38,109 transactions.
Last year was also a record year for transactions for freestanding single-family homes. There were 15,436 contracted sales in this segment, a year-on-year increase of 17.1% and the third consecutive year of year-on-year increases. The previous record was set in 2020, when there were 13,348 contracted sales of pre-owned freestanding homes in greater Tokyo. Last year was also the third consecutive year in which the number of transactions topped 15,000.
The average sales price of a pre-owned apartment in greater Tokyo reached ¥38,690,000 ($340,000 USD) in 2021. This was a year-on-year increase of 7.5%, the ninth consecutive year of year-on-year increases.
The average sales price of pre-owned freestanding house was ¥34,510,000 ($303,000 USD), a year-on-year increase of 10.5%, and the first time in three years that the average sales price has risen year-on-year.
These were the main takeaways from the Real Estate Information Network for East Japan (East Japan REINS)’s market report for 2021. East Japan REINS is equivalent to the multiple listing service for eastern Japan.
Here are the other key takeaways from the report:
The average price per square meter for a pre-owned apartment came in at ¥590,810 ($5,189 USD), the ninth consecutive year of increases. In the past nine year period, the average price per square meter has climbed 56.6%. The 2021 per square meter price was also an 8.4% year-on-year increase, the highest rate of increase in the last ten years.
In 2021, the average property floor size decreased by 0.9% to 64.68 square meters. This was a year-on-year decrease of 0.9% and the first time in two years in which the average floor size has fallen year-on-year.
The average age of a re-sale apartment sold in the greater Tokyo area in 2021 was 22.67 years, compared to 21.99 years in 2020.
The 2021 report indicates that supply in the Tokyo metropolitan area remains tight. Last year, for the third consecutive year, there were fewer than 16,000 pre-owned apartments newly registered for sale. The average price per square meter for newly registered properties increased for the eighth consecutive year.
Pre-owned freestanding houses
The average building floor size of a pre-owned freestanding house sold in greater Tokyo in 2021 was 104.23 square meters, which was a decrease of about 1.0% compared to 2020. The average lot size was 143.77 square meters, a year-on-year drop of 2.8%.
Pre-owned freestanding houses sold in greater Tokyo were also slightly “younger,” with the average construction year coming in at 21.20 years, versus 21.62 years in in 2020.
What is driving record transactions and strong price growth?
As we previously covered in detail in this post, there are a number of factors contributing to the record breaking pre-owned apartment single-family home market in Tokyo and around Japan.
One of the main underlying causes is Japan’s very low interest rate environment. In many countries, housing prices have been increasing in recent years buoyed by quantitative easing by central banks working to support their economies amidst the pandemic. While central banks in Europe and the U.S. are signaling that they will likely be raising rates this year, the Bank of Japan said last week that it would maintain its easy money policy, as its two percent inflation target is not yet within reach.
Sales in the pre-owned home market have also been juiced by record high prices in Tokyo’s new condominium market. The average unit price of a newly constructed condominium sold in the greater Tokyo region hit a record high of ¥62,600,000 ($550,000 USD) in 2021, up 2.9% year-on-year, and outstripping the previous high reached in 1990 during the asset bubble era. For a more in-depth look at what has been happening with sales in the newly constructed condominium market, please see this post. Middle-income buyers who cannot compete in the new apartment market have had to look for alternatives in the pre-owned apartment and single-family home market.
Last year we also saw a continued release of pent-up demand. This was after buyers faced a sharp pullback in supply in the latter half of 2020, when Tokyo was put under the first state-of-emergency (SOE), which lasted from around April 7th to May 25th of 2020. The result of the SOE was that many developers stopped showing newly constructed properties and closed showrooms; homeowners were also very hesitant to allow property viewings amidst the pandemic. However, supply bounced back in 2021, as the data above shows.
Of course, the pandemic itself has also shifted attitudes regarding the desirability of more spacious homes in the suburbs. More and more companies are also allowing, if not requiring employees to work-from-home, which has opened up the viability of looking for a home in the suburbs.
Sources: Real Estate Information Network System for East Japan (East Japan REINS), Tokyo metropolitan region real estate market trends report for 2021 (PDF in Japanese)
Lead image: Tokyo skyline via iStock 1364534596
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