New apartment supply in greater Tokyo reaches 24-year low
The supply of new apartments in greater Tokyo in 2016 reached a 24-year low with 35,772 apartments offered for sale. This represented a decrease of 11.6% from 2015 and was the lowest level seen since 1992. Developers have been restricting supply amidst rising construction costs, rising land prices and stagnant wages of potential buyers. Development sites in prime locations once earmarked for residential are being converted to office and hotel projects which can provide better returns.
Existing properties that have been renovated are now proving popular with buyers who would have once only considered buying new, which is putting further pressure on new apartment sales. In fact, a record high number of second-hand apartments sold in greater Tokyo in 2016. There were 37,189 reported sales, up 6.9% from 2015. Second-hand apartment sales exceeded new apartment sales by over 50%.
The average contract ratio for the year was 68.8%, which is below the 70% line said to indicate positive market conditions, and is the lowest ratio seen since 2009.Read more