As we previously wrote about in May last year the property market in central Tokyo has indeed switched to a seller’s market.
In December 2014, the supply of secondhand apartments in Chiyoda, Chuo and Minato reached a record low. Compared to 2011, there are currently less than half the number of apartments on the market. Meanwhile, sales activity has increased with the number of transactions in 2014 up 47% from 2011. Transactions in February 2015 were up 50.8% from the previous month and up 8.1% from February 2014. This was the busiest February seen in the past five years.
The supply of new apartments is also shrinking, while prices in February reached a five year high. Future supply is also looking to be limited with growing construction costs, increasing land prices and a shortage of suitable development sites causing great stress for developers.
We are noticing that even the old stock is starting to be snapped up as buyers get desperate. January, February and March are typically the busiest months in the real estate industry, as companies scramble to make last minute sales or purchases by the end of the financial year, and people get settled in their new homes before the start of the school year.
Naturally the higher demand and lower supply is pushing prices upwards. We noticed an especially steep increase in prices from July ~ August 2014 onwards, with some sellers increasing their asking price while the property was still on the market.
What does this mean for you as a buyer?
First of all, your options have already halved from a few years ago. Depending on your requirements, you may not have a lot to choose from.
Secondly, you are now competing with more buyers thanks to recent changes to the inheritance tax system which has spurred investment from wealthy Japanese, and a weaker Yen which has added to the number of foreign buyers. These kind of buyers are typically cash buyers who are prepared to move fast to secure a property.