Japan’s real estate market continues to rise in 2017

On the 21st March 2017, official land prices as of the 1st of January 2017 were released by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). According to the data presented, there has been a 4.7% rise in nationwide residential property price index resulting in 2 years of consecutive increase in Japan’s real estate market.

This trend indicates an increase in the number of hotels and stores being opened as a result of more foreign visitors in Japan and has also resulted in a 2 year consecutive rise in commercial locations. Due to government support such as tax reductions in home loans, another trend indicates that residential areas are now experiencing a flat fluctuation, compared to 9 years of consecutive declines in previous years.

Japan’s overall condominium prices have gone up by 5.2%, detached house prices have escalated by 2.7% and residential land prices have risen by a whopping 4.8% within the same period.

When it comes to Japan’s rising real estate market, Tokyo’s real estate prices have been climbing for 4 consecutive years in commercial, residential and industrial areas. According to statistics, Tokyo shows the second largest increase in price in commercial areas by prefectural comparison. This is followed by same areas in Osaka, where residential land prices have also experienced a stable increase.

The following summarize the real estate growth in both, Tokyo and Osaka Metropolitan areas:

  • Tokyo Metropolitan Area. Existing detached house prices increased by an average of 1.4% to USD 299,391 (JPY33,700,000), whereas existing condominium units have risen in value by 3.1% to USD 4,378 (JPY492,800) per square meter during the end of 2016 to 2017 – according to the Land Institute of Japan (LIJ). New condominium units have experienced a slight drop by 1.5% to USD 7,018 (JPY90,000) sq. m. in 2017.

 

  • Osaka Metropolitan Area. Existing detached house prices have dropped by 2.1% to USD 183,54 (JPY20,660,000), whereas existing condominium units have had an increase in price by 2.7% to USD2,710 (JPY305,000) per square meter. Similar to Tokyo, Osaka’s new condominium prices have fallen by 2.2% to USD 5,526 (JPY622,000) per square meter.

 

Abenomics and Japan’s rising economy

The reflationary policy introduced by Prime Minister Shinzo Abe, called Abenomics, has had an arguable impact on Japan’s wider economy. However, what is certain is that Abenomics has helped bolster Japan’s real estate market and elevate residential constructions.

The policy fuels the economy by devaluing the yen, boosting public infrastructure expenditure and the quantitative facilitation by the Bank of Japan (BOJ).

Abenomics has undoubtedly caused real estate prices in Japan to increase sharply. In addition, Tokyo hosting 2020’s summer Olympics will also fire up Japan’s property demand over the next 7 years.