How the coronavirus is affecting the Tokyo residential apartment market

The long-term effects of the coronavirus on the way we’ll live and work in the future are as yet unclear, but the pandemic has already left its mark on many aspects of our lives in just the past three months. In this article, we give an overview of how COVID-19 has affected the Tokyo residential apartment in just the last three months.

What happened in three months

In May, the latest month for which data is available, the average listing price of a pre-owned apartment in the greater Tokyo area was ¥36,740,000 ($343,000). This represents three consecutive months in which the average listing price fell in the re-sale apartment market in the Tokyo capital region, according to a recent report by Tokyo Kantei.

In the last few years leading to the first quarter of 2020, the resale apartment market in Tokyo has been buoyant, as buyers who couldn’t afford newly constructed apartments looked to buy pre-owned units. The peak came in February, as the average listing price for a family-sized 70-sqm apartment in greater Tokyo hit ¥38,240,000 (Tokyo Kantei, February 2020 Resale Apartment report).

The fall came in March, as the gravity of the coronavirus situation started to become obvious. On March 11th, the World Health Organization (WHO) officially declared COVID-19 a pandemic and by March 24th, the Tokyo Olympics were officially postponed, ending weeks of speculation as to whether they would be held this summer. In rapid succession, Japan banned foreign nationals from entry to the country on April 2nd and extended local state-of-emergency declarations to cover the entire country on April 13th.

New Apartment Market

The nationwide state-of-emergency was lifted on May 25th, but the social economic fallout is clearly still with us.

Looking only at the residential real estate market, for example, the effect on the supply of newly constructed apartments has been devastating. As detailed in these posts (Kansai Area New Apartment Supply Plunges 84% in May to Lowest Level Since 1991 and Tokyo new apartment supply sinks to lowest level since 1973 on impact of coronavirus), nationwide, developers and buyers have been extremely cautious in this environment. On a practical level, many developers also closed model showrooms throughout most of April and May to support social distancing.

Yet actual sales prices for newly constructed apartments remain at all-time highs. As detailed in this post, in the run up to the Tokyo 2020 Olympics (which have now been postponed to July 2021), the capital had experienced a building boom. This has led to severe shortages of building materials and labor, and high construction costs have in turn buoyed both listing and final sales prices.

The average sales price per unit in April increased by 5.4% year-on-year to 62.16 million yen, surpassing 2019 results for the first time in two months. The high ratio of properties listed for sale in the Tokyo 23 wards continues to prop up high average prices throughout the capital region.

In May, the latest month for which data is available, the supply of newly constructed apartments in Tokyo hit an all time low, sinking 82.2% year-on-year to 393 units. However, the average sales price of a newly constructed apartment hit ¥64.85 million ($605,500), a year-on-year jump of 6.4%. The average price per sqm reached ¥1,084,000, surging 21.3% year-on-year.


What explains this? Buyers who can afford to buy at this price point are still in the market, but supply is extremely tight. At the same time, construction costs are forecast to remain high in the foreseeable future. Sales prices in the new apartment market are not expected to drop this year.


In May, the contract rate in greater Tokyo was 72.3%, suggesting that buyers are eager to conclude deals.

The contract rate is the number of sales contracts divided by the number of units released for sale for the period. A contract rate of 70% is the dividing line between a sellers’ and buyers’ market.

The May number represented three consecutive months of a 70%+ contract rate.

In conclusion, the effects of the coronavirus have severely dampened the supply of new apartments in greater Tokyo. However, demand is seemingly unaffected and average sales prices are unlikely to drop in the near future.

Resale Apartment Market


As discussed above, the average listing price of a resale apartment in greater Tokyo has fallen for three consecutive months in the greater Tokyo region.

This is partly explained by the fact that more older units are being put on the market, which has pulled down the overall average.

Average listing price of a resale apartment in greater Tokyo, by month:

  • March: ¥37,480,000, -2.0% v. February
  • April: ¥37,010,000, -1.3% v. March
  • May: ¥36,740,000, -0.7% v. April

The May listing price also represented a year-on-year drop of 1.8%.


On the demand side, there is evidence that buyers (both Japanese and foreign) are flocking to the resale apartment segment because of record-setting prices in the new apartment market. However, the fact that potential buyers are being priced out of the new apartment market is not specific to the fallout from the coronavirus, as pointed out above.

On Real Estate Japan, in the last few months, we have also seen a significant year-on-year increase in the number of inquiries on resale apartments nationwide, including greater Tokyo. There has also been a surge in attendees at our free home buying seminars.


However, there is also anecdotal evidence that some home sellers are getting cold feet at the last minute because of concerns about social distancing. Based on Real Estate Japan’s contacts among Tokyo real estate agents, some sellers have refused to allow potential buyers to do property tours, despite listing their property for sale. In this sense, the effect of the coronavirus on the residential real estate market is undeniable.

It’s also important to mention the April 2nd international travel ban that has effectively locked out most foreign nationals from entering Japan. While foreigners account for only a fraction of the transaction volumes in the residential apartment market, in the last few years, the Japanese government has made a concerted efforts to make data and information more available in English. The government wants foreigners to be more active in the market. Yet, the travel ban has basically shut this down in the short term.

However, there is not enough evidence thus far to conclude that the resale residential apartment market will not be able to adapt to conducting business in the time of the coronavirus.

Sources: Real Estate Economic Institute, June 2020 report on Tokyo New Condominium Market (in Japanese), Tokyo Kantei June report on Three Major Metro Region Resale Apartment Market, June 2020 report (in Japanese)

Lead image: Tokyo Tower via iStock