The number of new condominiums put on sale in the greater Tokyo area in September fell 19.8% from a year earlier to 5,202 units, the second consecutive drop in two months, the Real Estate Economic Institute said Tuesday.
The decline reflected condominium developers’ reluctance to see their inventories increasing as condominium prices have risen fast enough to dampen demand, analysts said. The number of new condominium units put on sale in the this year is likely to fall below 65,000 units, the lowest level since 1993 when Japan was reeling from the collapse of the bubble economy.
Many consumers are shunning purchases of condominiums as their prices have surged, leading to an increase in condo inventories, institute officials said.
The only area of condominium sales that remains robust is the most expensive developments, but this trend is prompting developers to limit supplies at the lower end of the market in the hopes of generating price increases.
The new condo supply from January to October totaled 48,963 units, raising the possibility the full-year supply will fall short of 65,000 units. Only 62.5 percent of all new condos that went on sale for the reporting month found buyers, down 14.1 per cent down from the previous year.
The average price per condo unit in Tokyo and neighboring areas rose 8 percent to 46.93 million yen. For Tokyo’s 23 wards, the average price rose 23.2 percent to 62.99 million yen. Condo supply in the Tokyo metropolitan area in 1993 amounted to about 44,000 units. Due to the subsequent condominium sales boom, the number of units put on sale was recently consistently in the range of 70,000 to 80,000 units.
But the condominium industry is now concerned about the negative effects of rising prices and the enforcement of an amended building standards law for stricter screening.
“We’ve entered a difficult phase,” said Takashi Iwao, president of Haseko Corp., a condominium developer.
The institute projects November’s new condo supply in the greater Tokyo area at around 6,000 units against the year-before level of 6,859. The greater Tokyo area covers the prefectures of Kanagawa, Chiba and Saitama as well as Tokyo’s 23 wards and outlying areas.
By area, new condo supply in October went down 10.9 percent for Tokyo’s 23 wards and 45.3 percent for Kanagawa Prefecture, the institute said. However, the supply was up 24.3 percent for areas in Tokyo excluding the capital’s 23 wards, up 12.5 percent in Saitama Prefecture and up 61.1 percent in Chiba Prefecture, it said.
Combined with a similar drop in new construction starts, we wonder if this is the beginning of a downturn in the Japanese property market as a whole?