Upending a long downward trend, developers in the greater Tokyo area released an eye-popping 3,358 newly constructed apartment units for sale in October, an increase of 67.3% year-on-year and 35.6% compared to September. This was the main takeaway from the Real Estate Economic Institute’s November report on the Tokyo new condominium market.
Throughout 2020, developers nationwide have been extremely cautious about releasing new supply to the market in the midst of the pandemic. This has exacerbated a downward supply trend driven by high labor and material costs and competition with hotel developers for city-center land.
As detailed in this article (Average price of a new apartment in Greater Tokyo rises for 8th consecutive year), from January to June, the supply of new condominiums in the 23 Wards dropped 29.6% year-on-year. Many developers shut down model showrooms throughout most of April and May, following the government’s request for people to avoid non-essential outings to help prevent the spread of the coronavirus. The number of people visiting model rooms has not recovered to pre-pandemic levels.
The big jump in the October supply numbers was a welcome shot in the arm to what has been an anemic supply situation faced by potential buyers in the greater Tokyo area.
Supply by region
Supply of newly constructed apartments in the Tokyo 23 Wards accounted for 1,560 units in October (+51.5% year-on-year), or 46.5% of total supply. Elsewhere in the greater Tokyo area:
- Tokyo western suburbs: 241 units, +141.0% year-on-year, 7.2% of total supply
- Kanagawa prefecture: 627 units, +21.5% year-on-year, 18.7% of total supply
- Saitama prefecture: 589 units, +206.8% year-on-year, 17.5% of total supply
- Chiba prefecture: 341 units, +101.8% year-on-year, 10.2% of total supply
Average sales prices up in October
For the greater Tokyo region as a whole, the average sales price in October was ¥61,300,000 ($588,000) and the average price per square meter was ¥953,000. This was a year-on-year increase of 2.3% and 4.3%, respectively but still lower than the average of the first six months of 2020.
This was a reversal from September when average sales prices fell compared to August. For the greater Tokyo region as a whole, the average sales price in September was ¥58,120,000 and the average price per square meter was ¥877,000. This was a year-on-year decrease of 3.0% and 3.9%, respectively.
The average sales price for the first six months of 2020 was ¥66,680,000.
Below is the breakdown by area:
Average Sales Price by Area
- Tokyo 23 Wards: ¥75,630,000 (+8.0% year-on-year), versus ¥81,900,000 (Jan to June average sales price)
- Tokyo western suburbs: ¥53,740,000 (+0.8% YoY), versus ¥54,490,000 (Jan to June average sales price)
- Kanagawa prefecture: ¥57,290,000 (+10.6% YoY), versus ¥51,500,000 (Jan to June average sales price)
- Saitama prefecture: ¥40,250,000 (-11.3% YoY), versus ¥49,290,000 (Jan to June average sales price)
- Chiba prefecture: ¥44,760,000 (+2.7% YoY), versus ¥46,390,000 (Jan to June average sales price)
Average Sales Price per Sqm
Here is the area breakdown by price per square meter:
- Tokyo 23 Wards: ¥1,293,000 (+4.9% year-on-year)
- Tokyo western suburbs: ¥794,000 (-6.8%)
- Kanagawa prefecture: ¥852,000 (+14.5%)
- Saitama prefecture: ¥567,000 (-13.6%)
- Chiba prefecture: ¥622,000 (+4.4%)
In the greater Tokyo area as a whole, the contract rate for September was 70.4%, up 3 points compared to September, and up 127.8 points year-on-year.
The contract rate is calculated by dividing the number of sales contracts by the number of units release for sale for the period, for all units sold in the first month in which they were made available for sale. A contract rate of 70% is the dividing line between a sellers’ and buyers’ market.
Tight supply has helped to push the contract rate up this year. The contract rate by month this year for the greater Tokyo area is as follows:
- January: 63.0%
- February: 59.3%
- March: 70.0%
- April: 78.9%
- May: 72.3%
- June: 73.2%
- July: 62.4%
- August: 68.5%
- September: 73.4%
The regional contract rates show striking differences, with supply especially tight in the 23 Wards, the western suburbs, and Kanagawa.
- Tokyo 23 Wards: 66.9%
- Tokyo western suburbs: 56.8%
- Kanagawa prefecture: 62.0%
- Saitama prefecture: 86.4%
- Chiba prefecture: 83.3%
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Source: Real Estate Economic Institute, November 2020 (PDF in Japanese)
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