The supply of new apartments for sale in the Tokyo 23 Wards continued a long-term downward trend in September, as the number released for sale fell 9.5% year-on-year to 1,006 units. This was a huge jump from August when only 589 newly built apartments were offered by developers but does not buck the longer term trend.
Developers nationwide have continued to be 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 September report closely mirrors what was happening in August. Homebuyers in the Tokyo 23 Wards are facing fewer choices if they are looking to buy newly built condominiums. In contrast, supply in Chiba is on an uptrend.
This is the main takeaway from the Real Estate Economic Institute’s greater Tokyo area September new condominium market report. Below are other highlights from the September report:
Supply by region
As mentioned above, supply of newly constructed apartments in the Tokyo 23 Wards accounted for 1,006 units in September, or 40.6% of total supply. Elsewhere in the greater Tokyo area:
- Tokyo western suburbs: 175 units, -36.6% year-on-year, 7.1% of total supply
- Kanagawa prefecture: 474 units, +3.3% year-on-year, 19.1% of total supply
- Saitama prefecture: 262 units, -31.8% year-on-year, 10.6% of total supply
- Chiba prefecture: 560 units, +334.1% year-on-year, 22.6% of total supply
Average sales price on an annual downward trend
For the greater Tokyo region as a whole, the average sales price in September was ¥58,120,000 ($554,000) and the average price per square meter was ¥877,000. This was a year-on-year decrease of 3.0% and 3.9%, respectively.
September average sales prices also fell compared to August, when the average sales price was ¥60,110,000. 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 Ward sale prices were up year-on-year in September but were lower compared to the first half of the year.
- Tokyo 23 Wards: ¥69,250,000 (+4.4% year-on-year), versus ¥81,900,000 (Jan to June average sales price)
- Tokyo western suburbs: ¥55,740,000 (-14.4% YoY), versus ¥54,490,000 (Jan to June average sales price)
- Kanagawa prefecture: ¥53,860,000 (-1.5% YoY), versus ¥51,500,000 (Jan to June average sales price)
- Saitama prefecture: ¥48,0400,000 (+2.3%), versus ¥49,290,000 (Jan to June average sales price)
- Chiba prefecture: ¥47,180,000 (-6.8%), 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: ¥1,145,000 (+4.9% year-on-year)
- Tokyo western suburbs: ¥915,000 (-5.4%)
- Kanagawa prefecture: ¥764,000 (-0.3%)
- Saitama prefecture: ¥682,000 (+1.9%)
- Chiba prefecture: ¥647,000 (-10.9%)
In the greater Tokyo area as a whole, the contract rate for September was 73.4%, up 4.9 points compared to August, and up 16.6% 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 contract rate showed signs of a strong buyers’ market, except for the Tokyo western suburbs and Saitama.
- Tokyo 23 Wards: 76.1%
- Tokyo western suburbs: 69.7%
- Kanagawa prefecture: 79.7%
- Saitama prefecture: 45.8%
- Chiba prefecture: 77.3%
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Source: Real Estate Economic Institute, September 2020 (PDF in Japanese)
Lead photo: Tokyo Station, photo by Scott Kouchi