Price of a New Apartment in Greater Tokyo Hits a 29-Year High

The average price of a new apartment sold in the greater Tokyo area hit a 29-year high of ¥59,800,000 ($545,000) in 2019. This is according to the Real Estate Economic Institute’s recently released analysis of 2019 sales data for the greater Tokyo metropolitan area, which consists of the city Tokyo and the prefectures of Chiba, Saitama, and Kanagawa.

The 2019 average sales figure represents a year-on-year increase of 1.9% and the first increase in two years, as well as the highest price point since 1990, when the average price was ¥61,230,000. The 2019 average sales price per square meter (¥879,000) also represented the seventh consecutive year of increases. The Japanese asset price bubble burst in early 1992, sending real estate prices into a multi-decade slide.

Below are the key takeaways from the REEI’s 2019 overview report of the greater Tokyo condominium market.

Decline in number of units sold

In 2019, the number of new apartments sold in the greater Tokyo area saw a 15.9% year-on-year plunge to 31,238 units, down for the first time in three years, and falling to the lowest level since 1992. Increasingly high listing prices have kept many buyers out of the new apartment market.

Tight competition in central Tokyo

The key driver in increasing average sales prices has been tight competition for apartments in central Tokyo areas by dual high-income households. These couples and families are vying for scarce units near major stations convenient for commuting and shopping. At the same time, developers are in competition for construction workers, with labor shortages also pushing up prices.

Monetary easing

The Bank of Japan’s massive monetary easing has also made it easier to obtain low-interest rate mortgages, further spurring demand.

In Tokyo’s 23 Ward, the average price of a new apartment sold in 2019 reached ¥72,860,000 ($664,000), a year-0n-year increase of 2.0%. The average price per square meter was ¥1,123,000.

Lower contract rate

With increasing sales prices, developers are starting to see a supply backlog, even as many developers are carefully controlling the number of units they are releasing for sale.

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 considered a healthy buyers market.

In 2019, the contract for the greater Tokyo area was 62.6%, up 0.5 points compared to 2018, but significantly below the 68.1% rate reached in 2017.

Average sales prices by area

  • Tokyo 23 Wards: ¥72,860,000 (+2.0% year-on-year)
  • Tokyo western suburbs: ¥54,870,000 (+4.8%)
  • Kanagawa prefecture: ¥52,950,000 (-3.0%)
  • Saitama prefecture: ¥45,130,o00 (+4.8%)
  • Chiba prefecture: ¥43,990,000 (+2.2%)

Source: Real Estate Economic Institute, January 22, 2020 (in Japanese)

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