House prices in Tokyo up 3.91% y-o-y in 2019

The average price of existing condominiums in Tokyo rose by 3.91% in 2019 from a year earlier, a sharp improvement from a y-o-y growth of just 0.61% in the previous year. During the latest quarter, existing condo prices rose by 1.65%.

In contrast, the average price of new condos in Tokyo fell by 3.43% y-o-y in 2019, following a decline of 0.53% a year earlier. 

Demand remains robust; supply is fallingExisting condominium sales in Tokyo rose by 2.4% to 38,313 units in 2019 from a year earlier, according to The Land Institute of Japan, while sales of existing detached houses in Tokyo increased 4.5% y-o-y to 19,035 units over the same period. In contrast, dwelling starts in Japan fell by 4% to 905,123 units in 2019 from a year earlier.

Rents, rental yields: poor yields at 2.66%

Tokyo apartment costs are high, at around $16,322 per sq. m. 

Japan: typical city centre apartment buying price, monthly rent (120 sq. m)
  Buying price Rate per month Yield
Tokyo $1,958,640 $4,346 2.66%

Recent news: The Japanese economy shrank by an annualized rate of 6.3% in Q4 2019, the biggest decline since Q2 2014, as the introduction of new sales tax hike from 8% to 10% weighed on consumer spending. The COVID-19 outbreak is expected to exacerbate the situation and could push the world’s third largest economy into technical recession. A decline in tourism is a major problem for Japan, which welcomed 8.1 million Chinese visitors last year.

In an effort to buoy the ailing economy and cushion the impact of the sales tax rise, Prime Minister Shinzo Abe approved US$120 billion stimulus package last December 2019.