- The coronavirus crisis has transformed Tokyo back into a buyers’ market
- How long is this going to last?
- Tips for buyers in Coronavirus climate
- Sellers have had it good for the last several years, but now buyers have more opportunities
- Properties are selling at the bottom or middle of the price range, where about two months ago they were selling up to 10–20 percent above the top end
- Waiting for the market to come down is too late. Sometimes listings are waiting to be negotiated despite the asking price.
- Ask your agent for comparisons and analysis of the property of interest to buy at the right price.
The second-hand real estate market in Japan is maturing as it becomes the primary choice for buyers over new homes. The reason for this: prices overall have been rising over the past few years, particularly for new apartments and condominiums. Together with the government’s easing of monetary policy and consistently low-interest rates, this has created a prosperous marketplace, especially in Tokyo.
With prices of new condominiums rising particularly in central Tokyo, sales of new properties are slowly decreasing, and buyers are flowing to the second-hand market. For the first time, the market has seen a turnaround of new apartment supply vs second-hand sales transactions.
In this article, we look at how the impact of COVID-19 has affected the market place, why it is a good time to negotiate, and a few tips in getting a good deal.
Please note that the views expressed are those of the individual agent, and may not reflect the opinion of Housing Japan as a whole.
1. The coronavirus crisis has transformed Tokyo back into a buyers’ market
At every negotiation table, one party always has more power than the other and sellers have had it good for the last several years. Now, buyers have more opportunity in getting a deal on their terms and buyers who can act now have an advantage. You can buy well now and set yourself up for the growth that will come.
For instance, we are finding motivated sellers willing to cut 5-10 percent from their asking prices, especially to buyers who are financially fit and pre-approved. Compared to when it was a sellers’ market, generally, the rule book was that the buyer could only manage to cut 2-3 percent from the asking price, as overall prices were constantly rising.
2. How long is this going to last?
Currently, certain properties are selling at the bottom or middle of the price range, where about two months ago they were selling up to 20 per cent above the top end. If a seller is needing to let go of the property, you can pick up a good deal.
However, this period for negotiations may not last very long based on the Consumer Price Index (CPI) Housing Utilities forecast for Japan. The Housing Utilities Index shows the Consumer Price Index (CPI) of housing, water, electricity, gas in Japan. The theory has it that this indicator follows residential real estate prices in most countries more often than not.
Looking at the current forecast it shows a V shape recovery meaning buyers may not have a long time-frame. However, we are only talking macroeconomics and we are still uncertain about how long the pandemic will last. Therefore, this should be taken with a grain of salt.
3. Tips for buyers during this climate
If you’re financially in a position to buy, there are certain advantages on your side now. However, it is important to closely analyse the market and have an agent help you source listings, both on and off-market. This will increase your chances of getting a good deal in purchasing second-hand properties in Tokyo. Here are some tips in getting a good deal.
- It is beneficial to pursue several properties to make sure you have a stronger negotiating hand.
- Source off-market deals by forming relationships with agents. There are great deals that get sold without much notice because they are traded off-market. Creating a strong channel of information will increase your chances of finding the best deals.
- Show sellers you have the ability to make buying decisions quickly by being pre-approved by a bank for a mortgage.
- Use a buyer’s agent to help you source the right type of property and help you analyse listings in order to pay the right price. In particular, ask for sales and rent comparison around the area to make sure you are paying the right amount.
Now is a great time for buyers. To make the most of this opportunity it is important to use an experienced and reliable buyer’s agent.
Author: Mori Nishimura
Mori Nishimura is in the Sales Division at Housing Japan. With a keen eye for finding market gaps, Mori has successfully consulted both individuals and companies on how to land exclusive opportunities in the opaque Tokyo market. He began his career at a real estate startup and is an up-and-coming name in the Tokyo real estate industry.