Supply of new apartments in Tokyo shrinking

According to the Real Estate Economic Institute, 4,641 new apartments were released for sale across greater Tokyo in March, up 75.1% from February but down 9.7% from March 2013. This is the second month in a row where the apartment supply has fallen below the level from last year.

Since Spring in 2013, demand for new apartments has exceeded developer expectations and supply is starting to run short. The current stock of 3,828 apartments at the end of March is about half of the normal level for greater Tokyo.

Since the 2011 Tohoku disaster, the cost of building materials and labour has risen by 20 ~ 30%, which is causing new apartment prices to rise as developers pass these costs onto the buyers. There are concerns, however, that the increasing sale prices could eventually reach a point where it causes demand to drop.

The Institute remarked that some developers were cancelling projects after acquiring development sites as construction costs made their plans unprofitable.

President of Sumitomo Realty & Development, Kojun Nishima, remarked that while there may be sunny skies in the current market, dark clouds were on the horizon.

3,703 new apartments were sold in March, putting the contract rate at 79.8%, down 0.8 points from the previous month and down 2.3 points from last year.

The rising price of new apartments is causing some buyers, particular the younger generation, to consider apartments on the resale market. 3,994 secondhand apartments were sold during the month, up 4.3% from last year and exceeding the number of new properties sold by about 8%.

The average new apartment price was 52,150,000 Yen, up 3.0% from the previous month and up 8.5% from last year. The average price per square meter was 730,000 Yen, up 3.1% from the previous month and up 8.6% from last year. For a comparison, the average sale price of a secondhand apartment was 416,600 Yen/sqm, up 4.9% from last year.

1,034 apartments in 21 high-rise buildings (over 20 storeys) were offered for sale, up 91.8% from last year. The contract rate was 68.7%.

The following buildings saw same-day sellouts in March*:

  • Proud Ebisu Diage (43 apartments sold; average price of 96,780,000 Yen)
  • Glorio Sasazuka (40 apartments sold; average price of 60,270,000 Yen)
  • Proud Fuchu Toshiba (98 apartments sold; average price of 41,810,000 Yen)
  • Mid Hills Residence (22 apartments sold; average price of 38,250,000 Yen)
  • Ober Urawa Residence (99 apartments sold; average price of 52,760,000 Yen)
  • Sun Grande Funabashi Miyamoto (50 apartments sold; average price of 32,200,000 Yen)

*Same-day sellouts occur when all of the apartments released for sale are sold on the first day of that particular sales campaign. As many developers release apartments for sale in stages, it does not necessarily mean that all apartments in the building have sold.

Tokyo Metropolitan Area Sales

A total of 1,769 apartments were offered for sale in Tokyo’s 23-ku, up 70.3% from the previous month but down 20.2% from last year. 1,331 apartments were sold, putting the contract rate at 75.2%.

The average new apartment price was 61,860,000 Yen, down 3.1% from the previous month but up 5.2% from last year. The average price per square meter was 917,000 Yen, showing no change from the previous month but up 3.9% from last year.

No. of sales by apartment type in Tokyo’s 23-ku:

  • Studio: 2 (100% contract rate)
  • 1-Bedroom: 143 (77.3% contract rate)
  • 2-Bedroom: 319 (76.0% contract rate)
  • 3-Bedroom: 827 (74.7% contract rate)
  • 4-Bedroom: 33 (68.8% contract rate)

Average sale price by area:

  • Tokyo 23-ku: 61,860,000 Yen (+5.2% from March 2013)
  • Western Tokyo: 54,520,000 Yen (+37.8%)
  • Kanagawa Prefecture: 46,670,000 Yen (+13.6%)
  • Saitama Prefecture: 44,990,000 Yen (+16.5%)
  • Chiba Prefecture: 36,650,000 Yen (-8.1%)

Average sale price per sqm:

  • Tokyo 23-ku: 917,000 Yen (+3.9% from March 2013)
  • Western Tokyo: 710,000 Yen (+28.4%)
  • Kanagawa Prefecture: 651,000 Yen (+17.3%)
  • Saitama Prefecture: 599,000 Yen (+14.3%)
  • Chiba Prefecture: 480,000 Yen (-4.6%)

Sources:
The Real Estate Economic Institute, April 15, 2014.
The Nikkei Shimbun, April 16, 2014.

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