Land (not including the house) in Akasaka that sold at auction for 319% more than the court valuation.

The number of real estate foreclosure auctions held by the Tokyo District Court in the first half of 2022 was just 365, down from 407 in the same period in 2021.

According to the Teikoku Databank (TDB), bankruptcies in 2021 reached a 56-year low as the government extended 40 trillion Yen in unsecured and zero-interest business loans as part of pandemic relief measures. TDB has been monitoring post-financing corporate bankruptcies and had counted 300 as of May 2022. If these bankruptcies continue to increase, it could result in more foreclosed properties being put up for auction somewhere down the track.

Home loan defaults make up a small portion of the foreclosure market. Often that is due to the banks carrying out arranged sales that see many of these properties sold off-market before they make it to a court foreclosure. Recently, however, there have been foreclosures for borrowers who fraudulently took out home loans on investment properties that they then rented out to tenants. 

An average of 14 bids were made per auctioned property. The previous record high was 16 per property seen back in the second half of 2014. 99.45% of foreclosures sold during the bidding period. Two-thirds of the properties received over 10 bids each. Central Tokyo’s Chiyoda ward has just 1 foreclosure listing in the first half of 2022, as did Meguro ward. Minato ward had 7 listings. 

Properties sold for an average of 99.69% more than the court’s valuation, up from a 39.39% premium in the first half of 2021. The premium on apartments was 53.03%, and 136.99% for houses and land. Land foreclosures sold for an average of 119.81% more than the court valuation.

With property prices on the rise, the court has had to revise its market valuations upwards. And valuations on apartments are being adjusted in accordance with the layout and size, with family apartments valued higher than single studio apartments. This is due to the higher growth in prices for larger, family-type apartments, and the downturn in demand for smaller studio rentals during the pandemic. 

Source: The Jutaku Shimpo, August 30, 2022.