Sales prices of newly constructed apartments in the Kansai area, which includes Osaka, Kyoto, and Kobe, increased for eight consecutive months, hitting ¥49,010,000 ($470,000) in October, a year-on-year increase of 41.0%. The overall contract rate fell below 70% for two months in a row, suggesting that developers have not been able to efficiently close deals on units released for sale in some Kansai-area cities. These were the main takeaways from the Real Estate Economic Institute (REEI)’s November report on the Kansai new condominium market.
The REEI’s report covers the city and prefecture of Osaka, and the prefectures of Hyogo (where Kobe is located), Kyoto, Nara, Shiga, and Wakayama.
New supply starting to get a little traction
In the Kansai region, developers released 1,415 newly constructed units for sale in October, an increase of 11.3% year-on-year and 15.2% compared to September. This was the first time in two months that supply increased year-on-year, but was lower than the number put on the market in August (1,617).
As detailed in the January 2020 new condominium report for Osaka, even before the pandemic, developers were extremely cautious of depressing sales prices by releasing too many units for sale, both in the Tokyo and Kansai area. Especially in the Kansai region, which has seen high growth in the number of tourists from Asia (prior to the outbreak of the COVID-19 virus), builders are in tight competition with hotel developers for labor, materials, and land.
However, October new supply differed greatly depending on location, as can see below, with supply especially tight in the city of Osaka and Kyoto prefecture:
Supply by city and prefecture
- Osaka City: 582 units (-23.9% YoY), comprising 41.1% of total supply in Kansai region
- Osaka prefecture (not including the city of Osaka): 286 units (+105.8% YoY), 20.2% of total supply
- Kobe City: 265 units (+197.8% YoY), 18.7% of total supply
- Hyogo prefecture (not including the city of Kobe): 211 units (+49.6% YoY), 14.9% of total supply
- Kyoto City: 166 units (+100.0% YoY), 10.3% of supply
- Kyoto prefecture (not including the city of Kyoto): 29 units (-76.4% YoY), 2.0% of total supply
- Nara prefecture: 11 units (+450.0% YoY), 0.8% of supply
- Shiga prefecture: 30 units (+150.0% YoY), 2.1% of supply
- Wakayama prefecture: 1 unit (no units were released for sale in Wakayama in October 2019), 0.1% of supply
Average Sales Price of an Apartment in Kansai – By City & Prefecture
As mentioned in the lead, the average price of a newly constructed apartment sold in Kansai in October was ¥49,010,000, a sturdy year-on-year increase of 41.0%, but the growth in price-per-sqm was not as strong, coming in at ¥731,000 per sqm, for an increase of 1.7%. This was the first time in two months that the price per sqm has gone up.
The October average sales price was also a significant increase compared to the average sales price for April to September of ¥40,170,000 (+22.5%)
Below is the average sales price by major city and prefecture and the average price per sqm (the numbers in parentheses show the average sales price for April to September 2020).
- Osaka City: ¥58,530,000 (vs. ¥38,270,000); ¥949,000 per-sqm (vs. ¥830,000 per-sqm)
- Osaka Prefecture, excluding Osaka City: ¥42,310,000 (vs. ¥38,270,000); ¥581,000 per-sqm (vs. ¥830,000 per-sqm)
- Kobe City: ¥41,150,000 (vs. ¥37,770,000); ¥621,000 per-sqm (vs. ¥641,000)
- Hyogo Prefecture, excluding Kobe City: ¥42,520,000 (vs. ¥46,540,000); ¥574,000 per-sqm (vs. ¥637,000 per-sqm)
- Kyoto City: ¥52,040,000 (vs. ¥41,630,000); ¥746,000 per-sqm (vs. ¥761,000 per-sqm)
- Nara Prefecture: ¥51,340,000 (vs. ¥41,530,000); ¥704,000 per-sqm (vs. ¥547,000 per-sqm)
- Shiga Prefecture: ¥40,040,000 (vs. ¥35,910,000); ¥594,000 per-sqm (vs. ¥497,000 per-sqm)
- Wakayama Prefecture: ¥33,300,000 (vs. ¥36,220,000); ¥503,000 per-sqm (vs. ¥489,000 per-sqm)
Contract rate falls sharply versus Sept and year-on-year
In October, the contract rate in the Kansai region fell sharply to 58.0% , down 11.2 points compared to September, but down 15.8 year-on-year.
The contract rate is the number of units contracted for sale divided by the number of units offered for sale.
Contract rate by major city and prefecture:
- Osaka City: 45.5%
- Osaka prefecture: 78.3%
- Kobe City: 75.8%
- Hyogo prefecture: 35.5%
- Kyoto City: 82.8%
- Nara prefecture: 54.5%
- Shiga prefecture: 80.0%
- Wakayama prefecture: 100.0%
Can a foreigner buy property in Japan?
Yes. You can buy property in Japan regardless of your nationality or country of origin. There are also no residency requirements for buying real estate in Japan. Securing financing as a resident foreigner is more complicated. For info on financing, please see “Basic Requirements for Getting a Mortgage as a Foreigner in Japan“.
Please see this article for information on: Getting a property loan as a foreigner in Japan
Please see our step-by-step guide: Guide to Buying Property in Japan
See how much you can borrow and your monthly payments in yen: Yen Mortgage Loan Calculator
For information about purchase and brokerage fees: Breakdown of real estate purchase fees and taxes in Japan
Need to know: Earthquake building codes and technology in Japan
Bilingual Real Estate Agent in Tokyo Answers Your FAQs on Buying and Managing an Investment Property
Real Estate Japan is pleased to offer free, no obligation appraisals for owners of property in Japan. Please click here and fill out the form: How much is my property worth?
Please see our seminar page for a current list of seminars on: how to buy a home in Japan, investing in Japanese real estate for beginners, how to apply for permanent residency in Japan, how to sell property in Japan, and much more.
Sources: Real Estate Economic Institute, November 2020 Kansai new apartment report, Average sales prices for Tokyo metro and Kinki area April to September 2020 (PDFs in Japanese)
Lead photo: Osaka skyline via iStock