We find many clients miss out on some great purchases because they assume they will have plenty of time before a property sells. One of the biggest mistakes you can make when trying to enter a major market like Tokyo is to think that you are the only buyer out there. In reality, there are a lot of buyers circling the market, especially in central Tokyo. The vast majority are domestic buyers who know the market and are able to pounce quickly.
Let’s take a look at the data for second-hand apartment sales in Minato, Chuo, Chiyoda, Shibuya, Shinjuku and Shinagawa wards for the month of June 2017. There were 440 apartments reported to have sold this month, up 7.8% from last year. The median time a property was listed before selling was 48 days (about 7 weeks), 5 days longer than last year. The average sale price was 915,000 Yen/sqm (+4.8% from June 2016) and the average discount was 3.32%. As shown in the chart above, 40% of apartments sold within 30 days of listing, and 74% sold within 90 days.
In Manhattan, homes took an average time of 95 days to sell, according to the Halstead Manhattan Residential Market Report for the first quarter of 2017. In Sydney, properties took an average of 33 days to sell, as reported in CoreLogic’s Property Pulse Report issued in February 2017.
Distance from transport
In central Tokyo, many home buyers and tenants are looking for apartments that are less than a 10 minute walk from the nearest train station (not a bus stop). This is something that domestic investors are well aware of.
In June, the median sale time for an apartment less than a 10 minute walk from the nearest train station was 46 days, while the median for a walk of 10 minutes or more was 65 days. The median sale time for an apartment less than 5 minutes from the nearest station was 39 days.
In Minato-ku, median sale times for apartments located more than 10 minutes from a station ranged from 46 ~ 113 days, vs. 48 ~ 60 days for properties less than 10 minutes from trains.
In Chuo-ku the difference is quite noticeable with apartments over a 10 minute walk from the nearest station taking about 80% longer to sell. Medians over the past 6 months have ranged from 50 ~ 111 days, while those less than a 10 minute walk have had median sale times of 35 ~ 55 days.
In Chiyoda-ku, where there are multiple transport lines, there is no data as all apartments reported sold were less than 10 minutes from a station.
It is not surprising to note that apartments priced at the lower end of the market took less time to sell, with apartments under 30 million Yen (approx. 265,000 USD) taking just 28 days to sell. The average size of an apartment that sold for under 30 million Yen was just 28 sqm (301 sq ft).
It is surprising to see that discounts did not increase the longer a property was on the market. This could potentially be due to the most recent price being close to a seller’s minimum, or a stubbornness among sellers who would rather wait until they got the price they wanted. A third of apartments that sold in the month of June sold at their full asking price.
What can you do as a buyer?
- Be prepared. Before you start looking at properties, visit your bank/s to discuss loan arrangements. You will need to know how much you can expect to borrow, how much cash you will need as a downpayment, what the terms of the loan are, and the various documents you will need to obtain.
- Have a clear idea of what you are looking for and communicate your needs clearly and concisely to your agent. This will help you agent quickly identify properties that may be of interest and save you a lot of time.
- Do your research. If you can read Japanese, you can search through the multi-listing websites to get an idea of what’s available and listing prices. If you cannot read Japanese, ask your agent to provide some comps once you have found a property you are interested in.
About the data:
The data is based on transactions reported to the REINS database. Reporting is voluntary and a large amount of transactions are not reported on REINS. This data is not always 100% accurate.
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