Failed share houses start to hit foreclosure market

One of the early foreclosures of failed share houses developed as part of a wide-scale scam goes up for public auction next week. The minimum bid for the building and land is set at 23,672,000 Yen (approx. 205,000 USD), with results to be announced on October 25 (Update: It sold for 25,180,000 Yen to a private bidder). Back in January, several share houses by a former Ginza-based share house developer were listed for public foreclosure auction, selling for around a third to less than a half of what the original investors would have paid for them.

Japan’s apartment price to income ratio increases again

According to Tokyo Kantei, the average price of a brand-new apartment across Japan was 7.81 times the average annual income in 2017, up 0.34 points from 2016 and exceeding the previous high of 7.64 seen in 1992. A total of 28 prefectures saw affordability of brand-new apartments worsen in 2017, up from 22 prefectures in 2016. In Kanazawa City, the supply of high-priced new condominiums pulled up the average for Ishikawa Prefecture to a multiple of 8.37, up 3.52 points from 2016.

Japan’s whole building renovation market doubles this decade

It has often been said that Japanese consumers prefer new construction over old. However, this way of thinking has started to change over the past few years with home buyers turning their attention to the existing home market. In 2016, sales of existing ‘second-hand’ apartments in greater Tokyo exceeded those of brand-new apartments for the first time ever. This has not gone unnoticed by Japan’s major real estate developers, who, once focusing solely on new construction, are now entering the growing renovation market. 15 of the top 20 developers are already active in this market.

Fuji Keizai, a marketing research and consulting group, forecasts over 27,000 homes and apartments to be renovated and sold across Japan by professional house-flippers in 2018, up 10% from 2017. By 2020, this number is forecasted to reach 35,000 units, with a total of 131.4 billion Yen spent on renovations.

Average price of an apartment in central Tokyo reaches highest level in recent history

According to REINS, 2,303 second-hand apartments were sold across greater Tokyo in August, down 26.6% from the previous month but up 1.7% from last year. The average sale price was 33,180,000 Yen, down 1.3% from the previous month but up 2.5% from last year. The average price per square meter was 521,000 Yen, down 300 Yen from the previous month but up 3.2% from last year. This is the 68th month in a row to record a year-on-year increase in prices.

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