Even as many sectors face difficulty due to the impact of Covid-19, the pre-owned condominium market is exceptionally hot.
The number of contracts concluded on a monthly basis has reached a record high, and prices have continued to rise – by more than 5% year-on-year.
Why is this happening despite the pandemic, and how long will it last? We explore some of the issues in the following article.
Transaction data shows a hot market
The volume of completed purchase contracts for pre-owned condominiums has reached record levels in recent months, and are up 13.1% year-on-year, while prices have continued to rise, up 5.79% year-on-year.
Chart 1: Contracts and prices for pre-owned condominiums in the Greater Tokyo Area
A similar picture can be seen with pre-owned single-family houses, albeit with lower overall transaction volumes. Purchase contracts are at high levels, up 21.1% Y-o-Y, and average prices in November 2020 are up 4.80% compared with November 2019.
Chart 2: Contracts and prices for pre-owned single-family houses in the Greater Tokyo Area
A growing trend to rethink the way we live
The impact of Covid-19 has resulted in many people coping with a reduction in income and others losing their jobs; on the other hand, the property market is still performing well. One reason for this anomaly may be that the new situation is causing people to rethink the way they want to live.
1) Working remotely and spending more leisure time at home has made people realise they need additional space – for work and hobbies – leading people to seek larger homes.
2) As there is less opportunity to take children outside the home, more people are interested in single-family homes where they don’t have to worry about noise from indoor play impacting adjoining and upstairs neighbours.
3) From a psychological standpoint, the pandemic may have given people more opportunities to take a fresh look at their lives and future plans. As a result, more people are placing more importance on owning a home as part of their life plans.
Expecting prices to fall may cause you to miss your buying opportunity
People who are thinking about buying property this year may hope that Covid’s impact continues for an extended period of time and that due to the uncertainty about the future, condominiums will become harder to sell, resulting in falling prices.
This point of view oversimplifies the dynamics of the market. If you just keep waiting for prices to fall, you may end up missing the moment to purchase your ideal property – the perfect place in your desired location that matches your unique requirements.
Speak with one of our experienced agents today about the current situation in the Tokyo property market. Housing Japan combines local expertise with an international perspective to help you find your perfect place to buy to live in, or as an investment. We also support those who wish to sell their property.
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