The price of condos in Tokyo hits 29-year high in 2019
On Wednesday, a private think tank said the average unit price of new condominiums put up for sale in the greater Tokyo area reached a 29-year-high of ¥59.80 million in 2019.
According to the Real Estate Economic Institute, the average rose 1.9 per cent from the previous year to stand just below the record high of ¥61.23 million recorded in 1990 when Japan was in the last phase of the so-called bubble economy.
Because of labour shortages, the high average reflected rises in construction costs including labour expenses.
New condominium sales in the Tokyo region could experience a downturn if the prices continue to rise.
The data included newly built condominiums in Tokyo and three neighbouring prefectures – Kanagawa, Saitama, and Chiba.
For the first time in three years, the number of new condominiums put up for sale in the Tokyo area drops by 15.9 per cent to 31,238 units, marking the lowest level since 26,248 units in 1992.
An official of the institute said. “There were consumers who gave up on buying (a new condominium) as they couldn’t keep up with the rising condo prices,” due partly to high land prices.
The proportion of condominiums for which sales contracts were signed within the first month of sales was 62.6 per cent on average, dipping below the 70 per cent boom-or-bust dividing line for the fourth consecutive year.
According to the institute, there was no significant last-minute demand for condominiums ahead of the October consumption tax rate hike from 8% to 10%.
The new condo supply in the region is expected to remain low for the time being, as most condos in central Tokyo are currently being purchased by high-income households, such as households with double incomes.
The institute estimates the number of new condominiums launched in 2020 will rise 2.4% to 32,000 units.
The official said “Construction costs are expected to remain high in 2020,” suggesting that year-round condo market trends are likely to follow the patterns seen in 2019.