Now on sale

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It’s fairly well-known that Japanese people like new things, and if their budget allows they prefer buying a brand new house or condo rather than one that’s already been lived in. Half of the almost six million condominiums in Japan were built within the last 15 years, and reportedly the pace of construction is slowing due to the ongoing recession. According to statistics recently released by Reins Tower (East Japan Real Estate), sales of older condos also went down over the past year. Sales contracts were concluded for 1,943 used condos in August in the Tokyo Metropolitan area. That’s a 6 percent drop from the same month last year. However, the 920 sales in Tokyo alone represented a 0.9 percent increase over last year. The suburbs were a bit different, with Chiba seeing a 6.8 percent drop and Kanagawa a whopping 14.1 percent decline.

But that isn’t the whole story. While sales on the whole have gone down slightly, the average prices of the condos sold have gone up, as much as 4.6 percent in Saitama, for instance. What this would seem to indicate is that more newer used condos are being sold, since condominiums lose their value with time on a pretty consistent basis. In Tokyo, the trend is more localized. Sales of used condos in the three central wards (Chiyoda, Chuo, Minato) decreased by 15.4 percent, while those in the eastern portion of the city increased by 8.6 percent. Condos in the center of the capital are, of course, much more expensive that those in the eastern part, even though prices in central Tokyo have dropped 6 percent while those in eastern Tokyo declined only 1.4 percent (for comparison’s sake, prices in the western wards dropped the most, 8.2 percent, while those in the southwest–Meguro, Shinagawa, Ota–lost only 0.6 percent).

All indications point to a buyers market for used condos, which is hardly surprising. The stock is increasing. For the entire Tokyo metropolitan area, the available stock of used condos is 52 percent higher than it was last year, and in central Tokyo it’s gone up by 25 percent (all Tokyo by 35 percent). What this means is that it’s becoming more difficult to sell older condos, even in those areas like central Tokyo where it used to be considered easy to do so.

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3 Responses to “Now on sale”

  1. Mr.S. Says:

    Not to mention the high vacancy rate of both rental and owner-residential property. Quite an amazing amount of smoke, mirrors and cultural preferences keeping ANY value in Japanese property. I’d have unloaded my own already, if I had any. I certainly wouldn’t buy.

    Like

  2. charlie Says:

    just wondering if this is part of an area specific situation at present?

    my wife is interested in owning an apartment building in osaka. prices and advertised rent yields are fabulous compared with here in canada for used properties.

    any hints at whether this is a good long term investment most appreciated.

    and love the blog!

    Like

    • catforehead Says:

      If you’re going to buy an apartment building for rental income the closer to the center of a given city the lower your vacancy rate will be and the higher the rent you can charge. Obviously, the closer to the center of the city, the more expensive the building, too. In any case, if you buy a building for “investment” purposes, don’t do it if you think you’ll get more than what you paid for when you eventually sell it. As we said in the post they’re just building too many new apartments, both for sale and for rent, which means the surplus of residences will continue to grow in the future.

      Like

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