Average sales prices for newly constructed apartments in the Kansai region of Japan were up 11.7% year-on-year, continuing the trend established in the first half of the year.
The Real Estate Economic Institute’s (REEI) August market trends report for the Kansai region underscores the strong price growth and weak supply situation we’ve been tracking in western Japan.
As we’ve seen throughout the year, inventory of new condominiums in Kansai remains below the level needed to meet buyer demand for the foreseeable future. Combined with demand-side pressure, low supply will likely keep prices on an upward trend. In addition, macroeconomic factors, especially Japan’s ultra-low interest rate environment and the weak yen are continuing to sustain strong demand.
Here are the key highlights from the REEI’s report for July 2022:
Supply plunges year-on-year
One of the key takeaways from the July data is that supply fell sharply, for the second month in a row. Last month developers released 1,374 newly built units for sale in Kansai, or a decrease of 29.5% year-on-year.
Data for the Kansai region covers Osaka prefecture, the city of Osaka, Hyogo prefecture, the city of Kobe, Kyoto prefecture, the city of Kyoto, and Nara, Shiga, and Wakayama prefectures.
The supply in the city of Osaka, the biggest residential real estate market in Kansai, fell 32.6% year. Notably average sales prices in Osaka rose 46.1% and the average price per square meter was also up 12.1%, reflecting the very tight supply situation near central train stations.
The table below summarizes the supply by major city and prefecture.
The contract rate for the Kansai region as a whole came in at 65.8%, below the 70% mark that is the line between a seller’s market and a buyer’s market. This is the first time in three months in which the contract rate has dropped below 70%.
The contract rate is the number of units contracted for sale divided by the number of units offered for sale. Although the contract rate for the region as a whole dropped fell under 70%, note the very strong contract rates in the city of Osaka, Kyoto, Kyoto prefecture Nara and Wakayama.
Average sale prices by square meter continues to climb
The third key takeaway from the report is that the average sales price by square meter jumped 10.0% year-on-year, the third consecutive month it has increased.
Average Sales Price of an Apartment in Kansai – By City & Prefecture in June
Here is the breakdown of average sales prices by area for July 2022 compared to June 2022 and year-on-year.
Average Sales Price by Square Meter of an Apartment in Kansai – By City & Prefecture in June
Here is the breakdown of average sales prices by square meter by area for July 2022 compared to June 2022 and year-on-year.
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- REEI, Kansai New Condominium Market Trends Report, July 2022 (PDF in Japanese)
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Photo credit: Panoramic view of Osaka business district, iStock/bennymarty