New apartment prices in Tokyo down 7% in December but annual average reaches record high

According to the Real Estate Economic Institute, 9,389 brand new apartments were released for sale in greater Tokyo in December, up 181.4% from the previous month and up 13.9% from December 2013.

6,567 apartments were sold, making the contract rate 69.9%, down 8.5 points from the previous month and down 6.2 points from the previous year. This is just below the 70% level which is said to be the line between positive and negative market conditions.

The average new apartment price was 50,220,000 Yen, down 3.9% from the previous month and down 5.9% from the previous year. The average price per square meter was 710,000 Yen, down 3.7% from the previous month and down 4.4% from the previous year.

1,940 apartments in high-rise buildings (over 20-storeys) were offered for sale, up 63.9% from the previous year. The contract rate was 63.7%, down 15 points from the previous year and also below the 70% market indicator.

The Institute is expecting 2,000 apartments to be released for sale in January 2015, which would be the highest level seen four years.

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

  • The Residence Kamata Iris Court, Ota-ku: 33 apartments sold; average price of 46,850,000 Yen.
  • Proud Itabashi Hasune, Itabashi-ku: 60 apartments sold; average price of 50,800,000 Yen.

*Same-day sellouts occur when all of the apartments released for sale in a particular sales campaign receive purchase applications. 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

4,373 new apartments were released for sale in Tokyo’s 23-ku, up 167% from the previous month but down 4.3% from December 2013.

The average new apartment price was 59,270,000 Yen, down 7.2% from the previous month and down 8.0% from the previous year. The average price per square meter was 855,000 Yen, down 9.2% from the previous month and down 7.2% from the previous year.

146 apartments priced over 100 million Yen sold in Tokyo’s 23-ku, resulting in a contract rate of 75.5%. The worst performing price bracket was for apartments priced between 45 ~ 55 million Yen, which had a contract rate of 56%.

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

Studio 0
1-Bedroom 329 (91.4% contract rate)
2-Bedroom 538 (73.0% contract rate)
3-Bedroom 1,985 (64.8% contract rate)
4-Bedroom 118 (55.4% contract rate)

Average sale price by area:

Tokyo 23-ku 59,270,000 Yen (-8.0% from December 2013)
Western Tokyo 45,760,000 Yen (+5.1%)
Kanagawa Prefecture 45,520,000 Yen (+6.4%)
Saitama Prefecture 38,550,000 Yen (+12.0%)
Chiba Prefecture 35,940,000 Yen (+0.5%)

Average sale price per sqm:

Tokyo 23-ku 855,000 Yen (-7.2% from December 2013)
Western Tokyo 637,000 Yen (+6.7%)
Kanagawa Prefecture 653,000 Yen (+12.8%)
Saitama Prefecture 552,000 Yen (+15.2%)
Chiba Prefecture 460,000 Yen (-2.1%)

Looking back at the new apartment market in 2014

In 2014, a total of 44,913 new apartments were released for sale across greater Tokyo, down 20.5% from 2013 and 53% below the peak seen in 2000. Supply in Tokyo’s 23-ku was down 26.7% from the previous year. The increase in the consumption tax rate from April 2014, along with rising construction costs has caused developers to postpone sales and to be cautious with the timing of their sales.

The average apartment price across greater Tokyo was 50,600,000 Yen, up 2.6% from 2013. This is the second year in a row to see an annual increase.

In Tokyo’s 23-ku, the average price was 59,940,000 Yen, up 2.4% from 2013, and the highest level seen since the mini-bubble in 2007 when the average price reached 61,200,000 Yen. The average price per square meter was 873,000 Yen, up 0.9% from 2013, and the highest level seen in over 10 years.

908 apartments priced over 100 million Yen were offered for sale, down 39.6% from 2013 and down 70.5% from the peak of 3,879 apartments seen during the bubble in 1990.

The most expensive apartment sold in 2014 was a 700 million Yen 2-Bedroom apartment in Park Mansion Mita Tsunamachi. The 10th floor apartment had an average price of 4,192,000 Yen/sqm. The building is scheduled for completion in early 2016.

Park Court Mita Tsunamachi 1
The most expensive new apartment sale in 2014 was a 164 sqm apartment in Park Mansion Mita Tsunamachi for 700,000,000 Yen.

 

45,000 new apartments are expected to be supplied in greater Tokyo in 2015, up 0.2% from 2014.

The Institute believes the new apartment market in 2015 may show signs of improvement but it may be limited to large projects within Tokyo’s 23 wards. Price rises caused by rising construction costs may lead to difficult sale conditions in outer suburban areas.

Sources:
The Real Estate Economic Institute, January 21, 2015.
The Nikkei Shimbun, January 21, 2015.

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