New condominium prices in the Sendai area continue to surge, with the average price in the first half of 2015 increasing by 10% from the previous year to 42,620,000 Yen (343,000 USD). This price is now around 40% higher than pre-Tohoku earthquake prices and 20% higher than prices during Japan’s asset price bubble in the late 1980s.
Construction costs have increased following the disaster due, but the increase in prices has been met with an increase in demand and a relative shortage in supply of new construction.
Advertising firm DG Communications has been recording data on new apartment prices since 1988. In 2013, new apartment prices in greater Sendai reached a new record and were 0.7% higher the previous peak of 35,339,000 Yen last seen in 1991.
In 2014, there was a shortage in the supply of new apartments in central Sendai city and Aoba-ku. The average price in Aoba-ku reached 59,840,000 Yen (481,000 USD).
The average price of a new apartment across greater Sendai in the first half of 2015 was 555,000 Yen/sqm (415 USD/sq ft), up 9% from the first half of 2014. In Aoba-ku, the average price reached 758,000 Yen/sqm (566 USD/sq ft), up 24% from last year.
406 new apartments were offered for sale, up 75% from last year. Supply reached the bottom in 2014 and is expected to increase as developers aggressively acquire more development sites around Sendai.
Despite the growing prices, market conditions remain favourable with 90.1% of apartments selling within the first month of sales, up 3.0 points from last year. The total contract rate for the first half of 2015 was 93.8%.
According to Tokyo Kantei, the average sale price of new condominium in Miyagi Prefecture was 8.24 times the average annual income in 2014, up from a multiple of 6.20 in 2013. The average price of a 70 sqm (753 sq ft) new apartment was 34,940,000 Yen in 2014, up 24.1% from 2013, while the average income dropped by 6.6%.
The Nikkei Shimbun, August 14, 2015.
Tokyo Kantei, July 30, 2015.