New apartment supply in Tokyo drops for 5th month

Supply of brand-new apartments across greater Tokyo between January and May has fallen to the lowest levels seen following the crash of the bubble in 1992. Rather than release new apartments onto the market, developers are focusing their attention on reducing unsold inventory.

According to the Real Estate Economic Institute, a total of 2,206 brand-new apartments were released for sale across greater Tokyo in May, up 55.2% from the previous month but down 10.4% from last year. This is the fifth month in a row to see a year-on-year decline in supply. The average apartment size was 68.16 sqm (733 sq.ft).

Tokyo sees drop in new listings for first time in 19 months

According to REINS, a total of 2,749 second-hand apartments were reported to have sold across greater Tokyo in May 2019, down 20% from the previous month and down 1.3% from last year. The average sale price was 33,250,000 Yen, down 2.2% from the previous month but up 0.6% from last year. The average price per square meter was 518,000 Yen, down 2.8% from the previous month but up 1.4% from last year. The average age of an apartment sold was 21.63 years.

A forecast of new apartment prices between 2019 and 2025

On May 28, the Japan Real Estate Institute (JREI) issued their latest medium-term forecast for the price of brand-new apartments in Tokyo’s 23 wards. As we saw last year, price predictions have again been revised upwards from earlier forecasts. In 2019, the average new apartment price is forecast to be 1,065,000 Yen/sqm, up 0.4% from 2018 and 7.7% than an earlier forecast. 

Local market report: Daikanyama (2019)

Daikanyama is as fashionable and trendy as Omotesando, but with a more laidback vibe on weekends. Sitting in a prime position between Ebisu and Shibuya Stations, it is a great place for a lucky few to call home. It is extremely difficult to find suitable homes and apartments on the market in this neighborhood due to a naturally limited inventory (a lot of the neighborhood is low-density), while many of the residents tightly hold onto their homes for the long-term. 

Let’s take a look at the current real estate market conditions.

New apartment supply in Tokyo drops 40% and hits 27-yr low

The total supply of new apartments released for sale across greater Tokyo in April saw a year-on-year drop of 39.3% to just 1,421 apartments. This is the lowest supply seen for the month of April since 1992. The reason for the low supply is due to both developers putting their efforts towards selling current inventory, along with an expectation of low buyer turnout during the 10-day Golden Week holiday. 

Price-earnings ratio across Tokyo sees slight increase in 2018

In 2018 the price-earnings ratio (PER) for brand-new apartments in greater Tokyo was 24.96, down from a record high of 28.66 seen in 2016 but up slightly from 24.49 seen in 2017. Almost 80% of the districts around train stations had PERs of over 22, while just 2.5% had PERs of under 18. A high PER means a low rental yield.

The average price of a brand-new 70 sqm (753 sq.ft) apartment across greater Tokyo was 73,440,000 Yen in 2018, up 9.9% from 2017 and up 22.4% from 2016. The average rent of a similarly sized new apartment was 241,631 Yen/month, up 7.4% from 2017 and up 37.6% from 2016.