Sales of brand new 100 million Yen + condos triple in January

According to the Real Estate Economic Institute, 1,494 brand new apartments were released for sale in greater Tokyo in January, down 75.9% from the previous month and down 11.0% from January 2015. This is in line with the Institute’s forecast of 1,500 units.

876 apartments were sold, resulting in a contract rate of 58.6%, down 6.2 points from the previous month and down 16.3 points from last year. This is the first time since July 2008 that the contract rate has dropped to the 50% range. 75 apartments in 7 high-rise buildings (over 20 storeys) were offered for sale. The contract rate was 32.0%, down 28.2 points from January 2015.

One of the reasons for the lower contract rate is the relatively high prices which have been pushed up by rising construction costs and land prices. Developers are also taking a ‘wait-and-see’ approach to carefully time the release of apartments in order to avoid unsold inventory.

Meanwhile, 2,655 second-hand apartments were reported to have sold in January, which is triple the number of new apartment sales. Second-hand apartment transactions were also up 8.8% from January 2015.

Although the contract rate for new apartments was low across the board, demand remains strong in the top end of the market. In Tokyo’s 23 wards, 98 new apartments priced over 100 million Yen were offered for sale in January, up from 30 that were offered in January 2015. 83 apartments were sold, up from 28 sales in 2015, and resulting in a contract rate of 84.7%.