How long were apartments sitting on the market and how much of a discount did they trade at? The below is summarized from a recent report provided by Tokyo Kantei that looks into any impacts that the coronavirus pandemic may have had on Japan’s residential real estate market in the first half of 2020.
The aftermath of the global financial crisis in 2008 and 2009, and the 2011 Tohoku disaster and appreciation of the Japanese Yen provide good comparisons for real estate market shocks. This time around, however, we have record-low home loan interest rates, more double-income households, and several years of positive consumer sentiment behind us.
The housing market essentially froze during April and May of this year as the country declared a State of Emergency. Developers closed show rooms, brokerages took a long holiday, and buyers held off on major purchases until June.
In Greater Tokyo, it took an average of 3.91 months to sell an existing apartment in the first half of 2020, down from a 4.00 month average in the first half of 2019. Since 2013 the average has ranged from 3.51 ~ 4.40 months.
The difference between the list price and sale price has held steady since 2013. In the first half of 2020 there was a 6.59% discount, an improvement from a 6.80 ~ 6.89% difference seen in 2019. After the global financial crisis in 2008 and 2009, the difference was as high as 10% before returning to the 6% range in 2010. The 2011 Tohoku disaster saw discounts return to the 9% range in late 2011 and 2012.
In the Osaka region, the difference between list price and sale price was 6.92% in the first half of 2020. It has ranged from 6.07 ~ 7.07% since 2015. It briefly dropped to 10.34% in the first half of 2009 before sitting around the 7 ~ 9% range between 2010 and 2014. The average time to sell was 3.59 months, down from 3.92 months in the first half of 2019. Over the past 15 years, the average time to sell has ranged from 2.92 to 4.04 months.
Fukuoka Prefecture has been buoyed by positive market conditions since 2013 as its proximity to China and South Korea has led to an influx of foreign tourists. There was a push for heavy capital flows into hotel and retail developments around Fukuoka City, while easy financing conditions helped support large-scale redevelopments and infrastructure projects. The city is a particular draw for the younger population moving in from regional Kyushu to study and work, creating diverse residential needs. Picking up on this growing demand for housing, investors started to become more active in the buy-to-let sector. The market peaked in 2015 with the average discount just 4.26%. Between 2015 and 2015, the average time on the market ranged from 2.10 ~ 2.72 months. By 2017, oversupply conditions set in with and price reductions increasing, leading to a softening of the apartment market. The average discount has been gradually growing since 2018. In the first half of 2020 it was 8.71%, while the average time on the market had risen to 3.95 months – the highest since the first half of 2009.
Source: Tokyo Kantei, July 30, 2020.
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