Some critics in the industry are predicting the price of condominiums in Tokyo shall drop soon simply because they are too expensive for people to buy.
According to Nikkei in December 2017, the average price of a newly built condo in the capital region — Tokyo and the surrounding prefectures of Kanagawa, Saitama
and Chiba — rose 7.6% in 2017 to 59.08 million yen ($533,000).That was higher than the average in 1989 and 1991 and the second-highest level ever,
trailing only the 1990 record by 2.15 million yen.
Are condominiums really too expensive ? Are those critics are right ?
We need a crystal ball to predict the future
but today I am going to discuss the reason why the price of condominiums may go down.
Personally though, I am still mildly bullish about the market right now due the global aspect (see below UBS report)
and the healthy growth of the secondhand condominium market.
It is always to good to listen to the people with different opinions.
Let’s listen to what critics have to say.
We saw the condominiums developers go bankrupt one after another in the recession after the global financial crisis in 2008.
Nonetheless, the current price of newly built condominiums in greater Tokyo area has risen up sharply over several years and they are becoming more and more unaffordable for average salaried workers.
In the latest Tokyo kantei report in 2017, the average price of new condominiums are about 8-10 times higher than average annual income of the skilled workers in greater Tokyo area.(vs. 14 times in London)
London house price
The reason for raising is not because real demand is strong because everyone wants to buy them.
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