The price of secondhand apartments in Tokyo is rising, with prices in some areas exceeding those seen in the mini-bubble in 2007. In Tokyo’s 23 wards, the average asking price of a 70 sqm in October 2014 was 42,560,000 Yen, up 8.5% from the low of 39,220,000 Yen seen in July 2012.
One of the main drivers behind the rising prices is the shortage in the supply of brand new apartments. Following the Lehman Shock (or global financial crisis), a number of small-to-medium sized developers filed for bankruptcy. This has left the market controlled by a small number of Japan’s top developers. Prior to the Lehman Shock, the annual supply of brand new apartments reach 80,000 units. In 2014, it has almost halved to around 40,000 units. Buyers, who have not been able to find new apartments in their desired area, have turned to the secondhand market which has reduced supply even further. In the central Tokyo area, there are only half as many apartments on the re-sale market than there were in 2011.
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