Greater Tokyo new condo supply increases as first-month sales soften

On May 21st, the Nikkei Shimbun reported that new condominium supply in Greater Tokyo rose in April, even as the average price Year-on-Year (YoY) fell back below 100 million yen and first-month sales remained below a key market benchmark.

According to data released the same day by the Real Estate Economic Institute, 1,163 new condominium units were released for sale in Greater Tokyo, covering Tokyo, Kanagawa, Saitama and Chiba.

That was up 16 percent from a year earlier.

The average price per unit rose 25 percent year on year to 87.36 million yen. Although prices were still higher than a year earlier, the average YoY fell below 100 million yen for the first time in three months.

The drop below 100 million yen was largely due to the composition of supply. Tokyo’s 23 wards, the highest-priced submarket in the region, accounted for a smaller share of the total units released.

Supply was also limited ahead of Japan’s Golden Week holiday period, with fewer high-priced projects brought to market.

By area, Tokyo’s 23 wards saw supply rise 38 percent year on year to 352 units, while the average price increased 39 percent to 124.98 million yen. Tokyo’s non-23 wards recorded a 105 percent increase in supply to 123 units.

Among the surrounding prefectures, Kanagawa rose 60 percent to 441 units, while Saitama increased 107 percent to 184 units. Chiba was the only area among Tokyo and the three surrounding prefectures to post a decline, with supply falling 81 percent to 63 units.

The initial contract rate, a watched measure of demand for new condominiums, stood at 62 percent, below the 70 percent level generally regarded as a sign of healthy sales conditions.

In Japan, as well as global new condominium markets, the figure refers to the percentage of units offered in the first phase of sales that receive purchase applications during the first month sales.

The weaker contract rate suggests that continued price increases are causing buyers to take longer before committing to purchases.

The Real Estate Economic Institute expects around 1,500 new condominium units to be released for sale in May, indicating a potential rebound in supply after the Golden Week-related slowdown.

Source:

Nikkei Shimbun (Japanese only; paywalled)