Condominium developers in the greater Osaka region slammed on the breaks in January, as the number of new apartments offered for sale slipped to a 27-year low. There were 621 newly-constructed units released for sale last month, the fewest since August 1993. This is the key takeaway from the Real Estate Economic Institute’s (REEI) January report on the condominium market in the Kinki region. Kinki consists of the prefectures of Nara, Wakayama, Kyoto, Osaka, Hyogo and Shiga.
January supply represented a 40.5% year-on-year drop and an 80.8% drop compared to December.
Supply and Demand Factors
The supply situation in the Osaka region mirrors the market conditions in greater Tokyo. As we discussed in this article (Price of a new apartment in Tokyo 23 Wards tops 100 million yen for first time in 27 years), developers are extremely cautious of depressing sales prices by releasing too many units for sale.
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. This has forced them to push up listing prices. At the same time, more and more people are being enticed to buy their own homes, as interest rates in Japan are at a historic low due to the BOJ’s monetary easing. The government is also offering numerous tax incentives and subsidies to help offset the effect of the increase in the consumption tax in October 2019.
Average Sales Price in Kansai Region
Tight supply and government-incentivized demand have supported a steady increase in prices. In January, the average price of a new apartment sold in the Kansai region (also known as the Kinki region) was about ¥54,000,000 (about $489,000), a year-on-year increase of 14.4%. This represented three consecutive months of increases, although the average price per-sqm was down 1.4%.
However, the contract rate in the Kansai region did slip to 66.8% in January (down from 70.2% last year and 71.0% in December). The contract rate is the number of units contracted for sale divided by the number of units offered for sale. A contract rate of at least 70% is considered a healthy buyers market.
Average Sales Price of an Apartment in Kansai – By City & Prefecture
The number in parentheses is the price per sqm.
- Osaka City: ¥43,530,000 (¥701,000 per-sqm)
- Osaka Prefecture, excluding Osaka City: ¥44,790,000 (¥618,000 per-sqm)
- Kobe City: ¥42,370,000 (¥540,000 per-sqm)
- Hyogo Prefecture, excluding Kobe City: ¥48,030,000 (¥656,000 per-sqm)
- Kyoto City: ¥42,850,000 (¥717,000 per-sqm)
- Nara Prefecture: ¥37,480,000 (¥461,000 per-sqm)
- Shiga Prefecture: ¥38,220,000 (¥519,000 per-sqm)
- Wakayama Prefecture: ¥32,840,000 (¥459,000 per-sqm)
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Lead photo: iStock, Osaka skyline and Abeno Ward