TOKYO -- Average condo prices in the Tokyo region last year climbed to the highest since 1990, while the growing sticker shock sapped demand and dragged listings to the lowest in more than a quarter century.
Prices for new condominiums in Tokyo and three surrounding prefectures rose 1.8% to an average of 59.8 million yen ($544,000 at current rates), the Real Estate Economic Institute reported Wednesday. The 2019 figure ranks second only to the record of 61.23 million yen set nearly three decades ago during the tail end of Japan's asset bubble period.
Real estate companies in recent years have concentrated on selling condos in central city areas and prime locations near train stations. The expense of acquiring plots in the heart of the city, combined with climbing construction costs, has driven condo prices skyward.
Prices within the city of Tokyo grew 2% to 72.86 million yen, while those in western Tokyo suburbs rose 4.8%. Values in Saitama Prefecture increased 4.8%, while Chiba Prefecture prices advanced 2.2%. Kanagawa Prefecture, including Yokohama, was the only locality where prices did not increase from 2018.
But the number of units going on sale in the greater Tokyo area dropped 15.9% to 31,238, as volume fell short of 35,000 units for the first time in 27 years.
The ratio of same-month contracts to listings rose half a percentage point to 62.6% last year. But the proportion remained below the boom-or-bust threshold of 70% for the fourth consecutive year.
"The rising prices have made potential buyers more cautious," said Tadashi Matsuda, a chief researcher at the real estate institute, based in Tokyo.
The softer purchases prompted real estate companies to prioritize inventory reduction, causing listings to shrink for the first time in three years. Some real estate developers appear to be applying discounts to low-demand properties, the institute said.
Listings in 2020 are forecast to increase 2.4% to 32,000 units, the institute said, as large complexes enter the market.
But prospects are dim for a cooling in condo prices. The high costs of construction and land purchases are projected to continue, forcing property developers to remain choosy over locations.