The Real Estate Economic Research Institute (REEI) said in its latest monthly report that the number of newly built condominiums released for sale in the Kansai area plummeted 84.6% year-on-year to 214 units in May, the lowest number since August 1991. The number also represented a 56.7% drop compared to April supply.
The May decline continues a year long downward supply trend in the Kansai area that has been further battered by the impact of the coronavirus. The state-of-emergency due to the virus was lifted nationwide in Japan on May 25th, but most developers around the country held back on releasing units last month and many also shut down model rooms.
As detailed in the January 2020 new condominium report for Osaka, developers are extremely cautious of depressing sales prices by releasing too many units for sale, both in the Tokyo and Kansai area. Especially in the Kansai region, which has seen high growth in the number of tourists from Asia (prior to the outbreak of the COVID-19 virus), builders are in tight competition with hotel developers for labor, materials, and land.
Below we go over the key takeaways from the REEI’s June report on May performance in the Kansai new condominium market.
Supply by region
The Kansai region consists of the city and prefecture of Osaka, and the prefectures of Hyogo (where Kobe is located), Kyoto, Nara, Shiga, and Wakayama. Below is the number of newly constructed condominium released for sale by region.
- Osaka City: 28 units (-96.3% YoY), comprising 13.1% of total supply in Kansai region
- Osaka prefecture (not including the city of Osaka): 87 units (-61.9% YoY), 40.7% of total supply
- Kobe City: 4 units (-96.4% YoY), 1.9% of total supply
- Hyogo prefecture (not including the city of Kobe): 40 units (-69.2% YoY), 18.7% of total supply
- Kyoto City: 5 units (-98.4% YoY), 0.5% of supply
- Kyoto prefecture (not including the city of Kyoto): zero units
- Nara prefecture: 5 units (+66.7% YoY), 2.3% of supply
- Shiga prefecture: 45 units (-6.3% YoY), 21.0% of supply
- Wakayama prefecture: 4 units (+33.3%), 1.9% of supply
In May, the contract rate in the Kansai region fell sharply to 50.0%, down 17.7 points year-on-year and down 27.9 points compared to April.
The contract rate is the number of units contracted for sale divided by the number of units offered for sale. A contract rate of at least 70% is considered a healthy buyers market. Below 70% represents a sellers market.
Contract rate by major city and prefecture:
- Osaka City: 60.7%
- Osaka prefecture: 56.3%
- Kobe City: 100%
- Hyogo prefecture: 35.0%
- Kyoto City: 100%
- Nara prefecture: 100%
- Shiga prefecture: 35.6%
- Wakayama prefecture: 25.0%
Average Sales Price of an Apartment in Kansai – By City & Prefecture
The average price of a newly constructed apartment sold in Kansai in May was ¥42,860,000 ($399,700) and the average price per sqm was ¥616,000. The average sales price represents three consecutive months of price increases, but the price per sqm was the second consecutive month of decline.
The average sales price in May was up 3.2% year-on-year but the average price per sqm was down 4.2% YoY.
Below is the average sales price by major city and prefecture. The number in parentheses is the price per sqm.
- Osaka City: ¥59,650,000 (¥961,000 per-sqm)
- Osaka Prefecture, excluding Osaka City: ¥39,280,000 (¥549,000 per-sqm)
- Kobe City: ¥40,220,000 (¥538,000 per-sqm)
- Hyogo Prefecture, excluding Kobe City: ¥44,010,000 (¥645,000 per-sqm)
- Kyoto City: ¥34,200,000 (¥510,000 per-sqm)
- Nara Prefecture: ¥40,640,000 (¥532,000 per-sqm)
- Shiga Prefecture: ¥39,300,000 (¥564,000 per-sqm)
- Wakayama Prefecture: ¥39,050,000 (¥509,000 per-sqm)
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Source: Real Estate Economic Institute, June 2020 (in Japanese)
Lead photo: Osaka, Japan – April 2, 2014: Tourists walk below Osaka Castle during the spring cherry blossom season. The original castle dates from 1583 and was most recently rebuilt in 1995. Via iStock.