New apartment prices in Tokyo’s 23 wards still not at bubble high, but close

In 2021 the average price of a brand new apartment released for sale across greater Tokyo reached the highest level in history, beating a record high set during the asset bubble years of the late 1980s and early 1990s.

The average apartment price in 2021 was 62,600,000 Yen, up 2.9% from 2020. This is higher than the previous record of 61,230,000 Yen seen in 1990. The average price per square meter was 936,000 Yen, up 1.2% from 2020. This is the 9th year in a row to see an annual increase in the sale price per square meter.

Tokyo prices still below peak

In Tokyo’s 23 wards, the average new apartment price was 82,930,000 Yen, just 4% shy of the peak of 86,670,000 Yen seen in 1991. The average price per square meter was 1,282,000 Yen, below the record high of 1,553,000 Yen/sqm seen in 1991. Overall, the average sale price in 2021 was up 7.5% from 2020, while the price per square meter increased by 2.5%. 

Kanagawa Prefecture saw average prices drop 3.1% from 2020, while Chiba Prefecture saw a 1.4% drop.

The average contract ratio across greater Tokyo was 73.3%, above the 70% line said to indicate healthy market conditions and 7.3 points higher than 2020. This is the first time since 2015 that the annual average has exceeded 70%.

Remaining inventory as of the end of 2021 was 6,848 units, down from 8,905 units at the end of 2020.

Kitasando home to most expensive apartment sold in 2021

The most expensive brand new apartment offered in 2021 was a penthouse in Park Court Jingu Kitasando The Tower. The 238.55 sqm (2,567 sq.ft) apartment was priced at 1.37 billion (approx. US$12 million), which works out to be around 5,740,000 Yen/sqm. 

In the Kansai region, the most expensive new apartment to have sold was a 236.06 sqm apartment on the 48th floor of Brillia Tower Dojima. The unit sold for 1.08 billion Yen (approx. US$9.5 million), or around 4,575,000 million Yen/sqm. 

In greater Tokyo, the total number of apartments priced over 100 million Yen reached 2,760 units, up 52% from 2020 but still below the peak of 3,079 units supplied in 1990.

The pricing of new construction is typically made up of land acquisition costs (with land usually acquired several years before the apartments go on sale), construction costs, marketing, and the developer’s profit margin. Land and construction prices have remained consistently high over the past few years, and the turmoil of the pandemic has done nothing to slow them down. Furthermore, supply chain issues caused by the pandemic have only added to construction costs. 

Source: The Real Estate Economic Institute, January 25, 2022.

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