New condominium sales in greater Tokyo had a banner year in fiscal 2017, as the average sales price for a newly constructed apartment hit ¥59,210,000 ($552,300), the highest level seen since 1990. This was also the sixth straight year of increases. These numbers were recently released in a report by the Real Estate Economic Institute (in Japanese).
The report covered the period from April 1, 2017 to March 31, 2018 and surveyed the greater Tokyo capital region, which includes the Tokyo 23 wards, Tokyo’s western suburbs, and Kanagawa, Saitama, and Chiba prefectures.
Below we summarize the key takeaways from the report.
Supply increased for the first time in four years
The number of newly constructed apartments released for sale in greater Tokyo reached 36,837 units, a year-on-year increase of 1.1% and the first increase since 2013.
This increase in supply comes despite rising labor and material costs in the last few years. Competition from hotel developers for scarce land in central areas has also dampened the number of new units in recent years. The highest number of new apartments released in a year was 95,479 units in 2000.
The supply of new apartments did not increase in all regions across Tokyo. The Tokyo 23 Wards had a year-on-year increase of 9.8% in the number of new apartments. Outside the 23 Wards: Tokyo western suburbs (16.0% decrease), Kanagawa prefecture (1.0% increase), Saitama prefecture (7.6% increase), Chiba prefecture (16.7% decrease).
Newly constructed units in the city of Tokyo (which includes the 23 Wards plus the western suburbs) accounted for 54.7% of the total.
Contract rate below “healthy market” level
The contract rate (the number of sales contracts divided by the number of units released for sale) in the greater Tokyo region was 68.8%. This was slightly below the 70% level expected in a healthy market. However, this was a year-on-year improvement of 0.3%.
Sale Prices and Per Sqm Prices by Region
The average sales price and sales price per sqm increased in all regions surveyed. For the greater Tokyo region as a whole, the average sales price reached ¥59,210,000 (a year-on-year increase of 6.9%) and the average price per sqm was ¥864,000 (a year-on-year increase of 7.9%).
Of note is that both the average sales price and price per sqm increased by double digits in Kanagawa Prefecture (which includes the cities of Yokohama, Kawasaki, Odawara, Kamakura, and Sagamihara).
Please see the breakdown by region in the chart below:
Same day sales
Of all units released for sales during the period, 1,968 apartments (5.3% of the total) were sold the same day they were put on the market.
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