Tokyo apartment contract ratio drops below 70%

According to the Real Estate Economic Institute, the number of new apartments released for sale in September in greater Tokyo (Tokyo, Kanagawa, Saitama and Chiba) dropped 9.3% from last year to 3,366 units.

The contract ratio for the month was 69.3%. This was the first time in 13 months where the ratio fell below 70%. A ratio below 70% is considered to be a sign of a slump in demand.

The average price for an apartment in September was 41,200,000 Yen (520,000 USD), down 3.4% from one year prior.

The total number of new units released for sale in the first half of 2012 (April to September) was 21,650 units, 9.5% higher than the first half of 2011. This was mainly the result of developers delaying the sale of apartments following the Tohoku disaster last year. The contract rate for the first half was 76.6%, down 0.2% from the same period in 2011. The average apartment price was 45,150,000 Yen, down 2.0% from 2011.

In October, 5,000 units are expected to hit the market, and a total of 53,000 new units are expected in greater Tokyo this year. With a falling contract ratio, developers face difficult times ahead.

Sources:
The Nikkei Shimbun, October 17, 2012.
The Yomiuri Shimbun, October 16, 2012.
Reuters, October 16, 2012.

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