New apartment prices down 10% in Tokyo

According to the Real Estate Economic Institute, 3,125 brand new apartments were released for sale in greater Tokyo in October, down 6.3% from the previous month and down 10.9% from last year. This is the 9th month in a row to see a year-on-year decline in supply.

The drop in supply is due primarily to an expected drop in demand following the increase in consumption tax in April 2014, as well as rising construction costs which are limiting the viability of many projects for developers. Sales for apartments priced under 40 million Yen have become particularly slow in recent months.

With recent data showing the second consecutive quarter of negative GDP growth in Japan, it seems highly probable that the next planned increase in the consumption tax rate will be delayed. A spokesperson from the Institute believes a delay in the next tax rise will provide a very positive benefit for the market.

1,978 apartments were sold, making the contract rate 63.3%, down 8.3 points from the previous month and down 16.3 points from last year. This is the lowest contract rate seen since February 2009 when it reached 61.7%. This is also the second month in a row where the rate has dropped below the 70% level which is considered to be the line between a positive and negative market conditions.

The average new apartment price was 45,600,000 Yen, down 4.3% from the previous month and down 7.1% from last year. The average price per square meter was 638,000 Yen, down 4.1% from the previous month and down 10.3% from last year.

348 apartments in high-rise buildings (over 20-storeys) were offered for sale, down 15.3% from the previous month and down 53.0% from last year. The contract rate was 61.5%, down 16.8 points from the previous month and down 20.8 points from last year.

Approximately 4,000 new apartments are expected to be released for sale in November, down 20% from last year.

The following buildings saw same-day sellouts* in October:

– Grande Maison Shirokane-no-mori The Tower, Minato-ku, Tokyo: 22 apartments sold; average price of 96,250,000 Yen.
– Lefond Kashiwa The Residence, Chiba: 20 apartments sold; average price of 45,450,000 yen.

[Left] Grande Maison Shirokane-no-mori and [Right] Lefond Kashiwa The Residence
*Same-day sellouts occur when all of the apartments released for sale in a particular sales campaign receive purchase applications. As many developers release apartments for sale in stages, it does not necessarily mean that all apartments in the building have sold.

Tokyo Metropolitan Area Sales

1,381 apartments were released for sale in Tokyo’s 23-ku, up 2.4% from the previous month but down 25.5% from last year. 988 apartments were sold, making the contract rate 71.5%.

The average new apartment price was 53,380,000 Yen, down 8.5% from the previous month and down 8.0% from last year. The average price per square meter was 777,000 Yen, down 7.7% from the previous month and down 10.5% from last year.

No. of sales by apartment type in Tokyo’s 23-ku:

  • Studio: 1 (100% contract rate)
  • 1-Bedroom: 44 (72% contract rate)
  • 2-Bedroom: 164 (70% contract rate)
  • 3-Bedroom: 720 (72% contract rate)
  • 4-Bedroom: 58 (70% contract rate)

Average total sale price:

  • Tokyo 23-ku: 53,380,000 Yen (-8.0% from October 2013)
  • Western Tokyo: 45,250,000 Yen (+2.2%)
  • Kanagawa Prefecture: 39,260,000 Yen (-2.1%)
  • Saitama Prefecture: 35,590,000 Yen (-2.6%)
  • Chiba Prefecture: 38,500,000 Yen (+9.5%)

Average sale price per sqm:

  • Tokyo 23-ku: 777,000 Yen (-10.5% from October 2013)
  • Western Tokyo: 613,000 Yen (-0.6%)
  • Kanagawa Prefecture: 549,000 Yen (-4.4%)
  • Saitama Prefecture: 516,000 Yen (+0.8%)
  • Chiba Prefecture: 489,000 Yen (+6.3%)

Luxury new apartment market still strong

Sales of apartments over 100 million Yen has remained strong with high contract rates. The supply of new apartments in this price range, however, is shrinking.

2014New ListingsApartments SoldContract Rate
October
100 million Yen +302273.3%
200 million Yen +22100.0%
September
100 million Yen +352777.1%
200 million Yen +44100.0%
300 million Yen +4375.0%
August
100 million Yen +887484.1%
200 million Yen +201785.0%
300 million Yen +1919100.0%
July
100 million Yen +1019998.0%
200 million Yen +99100.0%
300 million Yen +55100.0%
June
100 million Yen +434195.3%
May
100 million Yen +1016665.3%
April
100 million Yen +322681.2%
200 million Yen +11100.0%
March
100 million Yen +715273.2%
200 million Yen +22100.0%

Sources:
NHK News, November 17, 2014.
The Nikkei Shimbun, November 17, 2014.
The Real Estate Economic Institute, November 17, 2014.
Yucasee Media, November 17, 2014.

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