The increase in consumption tax from October has not had the anticipated effect in generating last-minute demand for new condo-type apartments in Tokyo. 

According to the Real Estate Economic Institute the supply of new apartments in the area, for the first half of 2019, has reached the lowest levels since 1992. This however hasn’t impacted selling price, as new apartment prices have reached the highest levels since 1991.

The Real Estate Economic Institute states a total of 13,435 new apartments were released for sale, down 13.3 percent from the first half of 2018 and the first time in three years to see a drop in supply; compared to the first half of 1992 when supply hit a record low of 10,959 apartments.

This has created an oversupply of new apartments, according to Japan Property Central one research firm showed new projects in 2013 were “typically” selling out within seven to eight months. However in 2018 some projects took up to 12 months to sell, with a quarter of new buildings still sitting on the market – six months after it completed construction.

Japan Property Central reported that a total of 23,500 new apartments is forecasted to be supplied in the second half of 2019, with total supply for the year reaching 37,000 units. A big upcoming release is Harumi Flag, the Athletes Village located on manmade island in Tokyo Bay – is expected to go on sale shortly. These apartments will be refurbished, once the 2020 Summer Olympics is completed and put on the market from 2023 onwards.

The oversupply of condos hasn’t had an impact on selling prices. The average price across Tokyo reached 61,370,000 Yen – up 2.9 per cent from the first half of 2018. The price per square meter was 907,000 Yen – up 3.7 percent from last year. The price per square meter was 1,196,000 Yen up 8.7 per cent from last year.

The rise in prices has helped pushed buyers into the more affordable second-hand apartment market. The transactions of existing apartments across greater Tokyo has exceeded new construction for the past three years. Resale listings in recently-built buildings in prime locations are also drawing buyers away from off-the-plan purchases.

Source: Japan Property Central, Real Estate Economic Institute 

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