Condominium buyers in the Kansai region scooped up smaller-sized units at a brisk pace in 2017, in both the new and re-sale markets. This led to a healthy jump in the per-tsubo price of condominium properties, despite a decrease in the prices of newly constructed units.
This is according to a report recently released by Tokyo Kantei (in Japanese). The Kansai region is located in western Honshu and consists of Mie, Nara, Wakayama, Kyoto, Osaka, and Hyogo prefectures.
Below we summarize the key takeaways from the data.
What was the average price of a new condo in 2017?
The average price of a newly constructed condominium in the Kansai region was ¥39.33 million ($362,000), a sharp year-on-year decrease of 9.3%.
Per Tsubo Price Trend from 2007 to 2017
The chart below details the average per tsubo price for newly constructed and re-sale condos in the Kansai region from 2007 to 2017. One tsubo is equal to 3.3 square meters. Prices are expressed in JPY 100,000, so 210.4 means that the per tsubo price is ¥2,104,000.
Share of smaller studio apartments jumps sharply
The main reason for the decrease in the average price was that the share of one room (1R and 1K) studio apartments of less than 30-sqm increased significantly in Osaka City, as well as the share of units priced in the ¥10 million range.
Since 2015, the share of units with 30-sqm or less of living space has grown from 11.5% to 25.5%. At the same time, the share of units with more than 30-sqm has shrunk from 4.0% to 3.0%
This pushed down the average amount of living space to 61.80-sqm, a drop of 15.2% compared to 2016.
In recent years, developers are building smaller units in central urban locations due to competition from hotel developers for prime land but also because of a longer term demographic shift to more and more single-person households. Tokyo Kantei notes that there has also been a move by some developers to build smaller units to discourage purchases purely for investment purposes.
Because the average amount of living space (as measured in square meters) decreased in 2017, the average price tsubo (1 tsubo = 3.3 square meters) jumped sharply to ¥2,104,000.
This was the first time in 25 years that the average price per tsubo for a new condo in the Kansai region topped ¥2 million.
What was the average price of a re-sale condo sold in 2017?
In 2017, the average price of a re-sale condominium in the Kansai region was ¥20.33 million ($187,000), up 2.2% year-on-year.
Re-sale condo market has a banner year
This was also the first time since 2000 that the unit price of a second-hand condo exceeded ¥20 million.
Unit prices have risen for five consecutive years, but the 2.2% increase last year is a significant drop compared to the 7.0% year-on-year growth seen in 2016.
Tokyo Kantei notes that the slowdown in prices for newly constructed condos is starting to spillover into the re-sale market.
In parallel to the new condo market, the average area of living space per unit in the re-sale market has been shrinking. Last year was the third consecutive year in which the average living area per unit has decreased. In 2007, the average area of living space per unit was 70.16-sqm. Last year, this number had dropped to 65.47-sqm.
The average unit price per tsubo for a re-sale condo in the Kansai region was ¥1,026,000, up 4.7% year-on-year, and the fifth consecutive year of growth.
Last year was the first time in 18 years that the average unit price per tsubo in the Kansai area topped ¥1 million.
Majority of properties located within 6-min walk of station
In 2017, the share of units located within a 6-min (or less) walk of the station remained unchanged at about 71.4%. About a third of properties were located within 3-min (or less) walk of the station. However, the share of properties located 20-min (or more) away from the station increased from 0.6% to 1.2%.
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Top photo: Kifune Shrine, Kyoto