Kansai New Apartment January Sales Prices Pick Up Steam

Sales prices of newly constructed apartments in the Kansai area, which includes Osaka, Kyoto, and Kobe, averaged ¥46,290,000 ($436,400 USD) in January, a year-on-year increase of 7.8%. This was one of the key takeaways from the Real Estate Economic Institute (REEI)’s January new condominium market trends survey for the Kansai region.

As we covered here (Kansai Apartment Forecast for 2021), for the Kansai region as a whole, the average sales price in 2020 was ¥42,490,000 ($412,000 USD), a year-on-year increase of about 9.9%. This means that the January average sales price topped the 2020 average price by 8.9%.

The sales price per square meter was also up year-on-year on January, hitting ¥440,000 per sqm (+7.0% YoY).

January was the first time in two months that both the average sales price and average price per sqm saw a year-on-year increase in the Kansai region.

The pick up in sales price occurred despite a jump up in supply. In January, developers released 695 newly built units for sale, a year-on-year increase of 11.9%, but a big drop (-77.6%)  from the number released on December 2020 (3,105 units).

It’s also important to note that in January, overall inventory in the Kansai region (3,458 units) was down compared to the previous month, for the first time in six months. The REEI also noted in its report that the extension of the state-of-emergency to cover Osaka, Kyoto and Hyogo prefectures, which was declared on January 11th, poured cold water on home buyer sentiment.

The resulting contract rate (the number of units contracted for sale divided by the number of units offered for sale) fell 5.6 points year-on-year to 61.2%. This compares to a contract rate of 80.0% in December 2020.

Basically, supply is starting to pick up and sales prices in January were up for buyers who found properties suitable enough to close on at their chosen price point. But a contract rate of less than 70% means that developers were left holding inventory that in a healthier market would have been sold.

It’s also critical to drill down to prices by city and prefecture. Sales prices and (sales price by sqm) varied significantly by area and above average increases in certain areas (notably Kyoto City) pulled the average for the whole region upward. Please scroll to the bottom of the article for price breakdown by city and prefecture.

2021 Supply Trend

To what extent will developers continue to release more new construction for sale? In the REEI’s market forecast for 2021, the institute estimates that developers in Kansai will release about 18,000 newly constructed apartments for sale in the region, which would be a year-on-year increase of 29.5%. This percentage jump would be consistent with the growth forecast for the Tokyo capital region (of about 31%).

The forecast for Kansai would also bring new supply levels above those of 2019.

Average Sales Price of an Apartment in Kansai – By City & Prefecture

Here is the breakdown of average sales prices by area for January 2021 compared to December 2020 and year-on-year.

Jan 2021 – Average Sales Price in JPY
Dec 2020 – Average Sales Price in JPY Jan 2021 v. Dec 2020 — MoM % Change Jan 2020 – Average Sales Price in JPY
Jan 2021 v. Jan 2020 — YoY % Change
Osaka City 47,930,000 36,240,000 32.3% 43,540,000 10.1%
Osaka Prefecture 40,230,000 45,700,000 -12.0% 44,790,000 -10.2%
Kobe 39,270,000 36,310,000 8.2% 42,370,000 -7.3%
Hyogo Prefecture 51,690,000 44,810,000 15.4% 48,030,000 7.6%
Kyoto City 66,420,000 29,990,000 121.5% 42,850,000 55.0%
Kyoto Prefecture 41,350,000 43,520,000 -5.0% N/A N/A
Nara Prefecture 44,260,000 33,480,000 32.2% 37,480,000 18.1%
Shiga Prefecture 41,800,000 40,380,000 3.5% 38,220,000 9.4%
Wakayama Prefecture 36,940,000 37,000,000 -0.2% 32,840,000 12.5%
Kansai Region 46,290,000 39,130,000 18.3% 42,960,000 7.8%

Average sales prices by square meter

Jan 2021 – Average Sales Price Per SQM in JPY
Dec 2020 – Average Sales Price Per SQM in JPY Jan 2021 v. Dec 2020 — MoM % Change Jan 2020 – Average Sales Price Per SQM in JPY
Jan 2021 v. Jan 2020 — YoY % Change
Osaka City 700,000 819,000 -14.5% 701,000 -0.1%
Osaka Prefecture 560,000 642,000 -12.8% 618,000 -9.4%
Kobe 545,000 745,000 -26.8% 540,000 0.9%
Hyogo Prefecture 815,000 616,000 32.3% 656,000 24.2%
Kyoto City 883,000 716,000 23.3% 717,000 23.2%
Kyoto Prefecture 536,000 563,000 -4.8% N/A N/A
Nara Prefecture 609,000 444,000 37.2% 461,000 32.1%
Shiga Prefecture 636,000 515,000 23.5% 519,000 22.5%
Wakayama Prefecture 505,000 477,000 5.9% 459,000 10.0%
Kansai Region 673,000 665,000 1.2% 629,000 7.0%

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Sources:

REEI, January 2021 Kansai New Condominium Market Trends Report (PDF in Japanese)

REEI, December 2020 Kansai New Condominium Market Trends Report (PDF in Japanese)

REEI, January 2020 Kansai New Condominium Market Trends Report (PDF in Japanese)

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