According to DG Communications, the average price of a new apartment in Sendai City in the first half of 2017 was 42,940,000 Yen, down 4.8% from last year. The average price for the year of 2017 is also expected to decrease from last year, marking the first decline since 2011.
Following the 2011 earthquake, a sudden jump the construction costs and a drop in supply saw the price of new apartments soar to record highs. In 2016, the average price increased by 5.1% from 2015 to 44,427,000 Yen — the highest price seen since record-keeping began in 1988.
Wealthy Japanese investors have been the driving force behind the demand to date, buying apartments as a means of offsetting their inheritance tax burdens and for holiday homes. One high-rise building built in Aoba-ku shortly after the earthquake is said to be mostly dark at night, with only a handful of full-time residents.
The local market changed in early 2017 with signs of diminishing demand for high-end properties in Sendai. Projects were selling out prior to completion in 2016, but a number of completed projects in the city now have unsold inventory.
Although wealthy investors may be shying from the market, demand from younger families is picking up the slack for lower-priced properties. A 20-storey, 75-unit condominium located near the Miyagi Prefectural Office and north of Sendai Station has been attracting family buyers. Most of the apartments are three bedrooms and priced in the 40 million Yen range. The developer is expecting it to sell out prior to its completion early next year.
The Kahoku Shimbun, October 6, 2017.
The Nikkei Shimbun, October 27, 2017.