Tokyo 23 Ward New Apartment Supply Drops by Half in August, Average Sales Price Falls

Homebuyers looking to buy a newly built apartment in the Tokyo 23 Wards may find that it’s easier said than done when it comes to finding a suitable range of properties to choose from. A big reason for this is that developers in the greater Tokyo area have continued to be extremely cautious about releasing new supply to the market in the midst of the pandemic.

In August, there were only 589 newly built units released for sale in the 23 Wards, a year-on-year drop of 51.0%. However, it’s important to note that this continues a long-term downward supply trend.

As detailed in this article (Average price of a new apartment in Greater Tokyo rises for 8th consecutive year), from January to June, the supply of new condominiums in the 23 Wards dropped 29.6% year-on-year.  Many developers shut down model showrooms throughout most of April and May, following the government’s request for people to avoid non-essential outings to help prevent the spread of the coronavirus. Model rooms are opening up again but foot traffic has not returned to the pre-pandemic levels.

In contrast, developers were more aggressive in releasing new supply outside the 23 Wards, which accounted for 35.3% of new supply in August. By region, outside the 23 Wards, August new supply was as follows:

  • Tokyo western suburbs: 168 units, +30.2% year-on-year, 10.1% of total supply
  • Kanagawa prefecture: 530 units, +41.7% year-on-year, 31.8% of total supply
  • Saitama prefecture: 176 units, +179.4% year-on-year, 10.5% of total supply
  • Chiba prefecture: 106 units, +296.2% year-on-year, 12.3% of total supply

Price

For the greater Tokyo region as a whole, the average sales price in August was ¥60,110,000 ($570,000), compared to ¥66,680,000 for the first six months of 2020.

Below is the breakdown by area.

Average Sales Price by Area

  • Tokyo 23 Wards: ¥68,860,000 (-4.07% year-on-year), versus ¥81,900,000 (Jan to June average sales price)
  • Tokyo western suburbs: ¥57,777,000 (-3.6% YoY), versus ¥54,490,000 (Jan to June average sales price)
  • Kanagawa prefecture: ¥60,014,000 (+29.4% YoY), versus ¥51,500,000 (Jan to June average sales price)
  • Saitama prefecture: ¥51,070,000 (+3.9%), versus ¥49,290,000 (Jan to June average sales price)
  • Chiba prefecture: ¥44,670,000 (+8.4%), versus ¥46,390,000 (Jan to June average sales price)

A key takeaway from August sales data is the drop (about 16.0%) in average sales prices for apartments sold in the Tokyo 23 Wards compared to the average price in the first six months of the year.

In contrast, August sales prices outside of the 23 Wards, except for Chiba, were all higher than in the first six months of the year.

Average Sales Price per Sqm

However, on a per-square-meter basis, average per sqm sales prices in the Tokyo 23 Wards increased 22.7% YoY in August.

  • Tokyo 23 Wards: ¥1,207,000 (+22.7% year-on-year)
  • Tokyo western suburbs: ¥863,000 (-6.2%)
  • Kanagawa prefecture: ¥889,000 (+33.3%)
  • Saitama prefecture: ¥763,000 (+9.0%)
  • Chiba prefecture: ¥611,000 (+6.8%)

Contract Rate

In the greater Tokyo area as a whole, the contract rate for August was 68.5%, up 6.1 points compared to July, but down 6.9% points year-on-year.

The contract rate is calculated by dividing the number of sales contracts by the number of units release for sale for the period, for all units sold in the first month in which they were made available for sale. A contract rate of 70% is the dividing line between a sellers’ and buyers’ market.

The contract rate varied widely by area, with Kanagawa and Saitama showing signs of a strong buyers’ market.

  • Tokyo 23 Wards: 63.8%
  • Tokyo western suburbs: 52.4%
  • Kanagawa prefecture: 79.2%
  • Saitama prefecture: 75.0%
  • Chiba prefecture: 61.7%

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Source: Real Estate Economic Institute, September 2020 (PDF in Japanese)

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