Apartment asking prices in Tokyo increase for 16th month but supply-demand balance starts to shift

Japan apartment prices Oct 2015

According to Tokyo Kantei, the average asking price of a 70 sqm (753 sq.ft) second-hand apartment in greater Tokyo in October was 31,970,000 Yen, up 1.2% from the previous month and up 12.3% from last year. This is the 14th month in a row to see a month-on-month increase in asking prices. The average building age was 22.3 years.

In Tokyo’s 23 wards, the average asking price was 49,780,000 Yen, up 1.3% from the previous month and up 17.0% from last year. This is the 16th month in a row to see a month-on-month increase. The average building age was 22.0 years.

In Tokyo’s central six wards (Chiyoda, Chuo, Minato, Shinjuku, Bunkyo and Shibuya), the average asking price was 69,690,000 Yen, up 0.7% from the previous month and up 15.8% from last year. This is the fifth month in a row to see an increase, although the rate of increase has slowed.

In Osaka, a large number of transactions in relatively new buildings in the city centre is said to be behind the rising prices. The average price in Osaka’s six central wards was up 3.1% from the previous month and up 17.7% from last year.

Inventory levels are finally starting to increase

Seller’s market conditions have persisted for quite a while in central Tokyo as demand from buyers has outstripped supply levels, but recent data suggests the market may be starting to balance out.

The current inventory of second-hand apartments advertised for sale in Tokyo’s 23 wards was 10,827 units in October, up 33.6% from last year, and up 9.8% from September. This is the highest level seen since March 2013. Tokyo Kantei suggests that this may be due to two causes: increasing property prices which are starting to price buyers out of the market, and a slow-down in demand as consumers temporarily refrain from buying after news broke about a faulty apartment building in Yokohama.

Inventory in central Tokyo’s six wards has seen a sharp increase. In October, there were 2,794 second-hand apartments advertised for sale, up 56.4% from last year. The president of a major brokerage remarked that the gap between asking prices and prices that buyers want to pay has reached a point where it is becoming increasingly difficult to achieve a sale.

It is possible that prices may have reached a ceiling as growing number of properties listed for sale are starting to reduce their asking prices. However, it may take some time for these effects to be felt throughout the market.

Tokyo inventory 2015

Asking prices across Japan:

Greater Tokyo31,970,000 Yen (+1.2% from Sep. 2015; +12.3% from Oct. 2014)
 Tokyo44,620,000 Yen (+1.6%; +15.9%)
 Kanagawa Prefecture25,200,000 Yen (+0.4%; +3.4%)
 Saitama Prefecture19,230,000 Yen (+0.7%; +3.2%)
 Chiba Prefecture17,940,000 Yen (-0.9%; -1.7%)
Kinki Region18,950,000 Yen (+1.6%; +5.0%)
 Osaka19,950,000 Yen (+1.9%; +8.7%)
 Hyogo Prefecture17,720,000 Yen (+0.7%; +0.3%)
Chubu Region15,610,000 Yen (+1.1%; +5.8%)
 Aichi Prefecture16,520,000 Yen (+1.0%; +7.0%)

Apartment asking prices by city:

Tokyo 23-ku49,780,000 Yen (+1.3% from Sep. 2015; +17.0% from Oct. 2014)
Yokohama City27,000,000 Yen (+0.7%; +5.1%)
Saitama City22,450,000 Yen (+0.7%+6.1%)
Chiba City16,660,000 Yen (-0.4%; -2.5%)
Osaka City24,670,000 Yen (+2.7%; +13.4%)
Kobe City18,320,000 Yen (+0.7%; +2.1%)
Nagoya City19,350,000 Yen (+0.1%; +7.7%)

Apartment asking prices in Tokyo, Osaka and Nagoya:

Tokyo central 6 wards69,690,000 Yen (+0.7% from Sep. 2015; +15.8% from Oct. 2014)
Jyonan, Jyosai 6 wards50,390,000 Yen (+0.9%; +12.0%)
Jyohoku, Jyoto 11 wards37,420,000 Yen (+0.8%; +13.9%)
Osaka central 6 wards33,140,000 Yen (+3.1%; +17.7%)
Nagoya central 3 wards23,540,000 Yen (-0.4%; +3.2%)

Tokyo Osaka Nagoya Oct 2015

About the data:

  • Tokyo central 6 wards: Chiyoda, Chuo, Minato, Shinjuku, Bunkyo, Shibuya.
  • Jyonan, Jyosai 6 wards: Shinagawa, Meguro, Ota, Setagaya, Nakano, Suginami.
  • Jyohoku, Jyoto 11 wards: All other wards in Tokyo.
  • Osaka central 6 wards: Fukushima, Nishi, Tennoji, Naniwa, Kita, Chuo.
  • Nagoya central 3 wards: Naka, Higashi, Chikusa.

The data above is based on advertised prices which may be higher than actual prices after negotiations. Click here to read the REINS report about actual sale prices in October.

Sources:
Tokyo Kantei, November 24, 2015.
The Nikkei Shimbun, November 24, 2015.

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