#Japan #Tokyo #MEMOCO #Used Condos

Insights on Average Used Condo Prices in Japan

In January 2025, MEMOCO, based in Shibuya, Tokyo, conducted a survey in collaboration with Sunmura regarding the perceptions of average prices for used condominiums. The survey involved 117 participants, comprising 66 men and 51 women, aiming to shed light on current market sentiments and the critical timing for potential buyers deciding to invest in the real estate sector.

Key Findings from the Survey

The survey results unveil that around 84% of respondents perceive the average prices of used condos as high in the current market landscape. Here's the breakdown of how perceptions varied:
- 55% stated they think prices are somewhat high.
- 29% categorically believe that prices are high.
- Only 13% feel prices are somewhat low, while a mere 3% said they are low.

This data indicates a significant sentiment of overpricing in the used condo market, aligning with the rising costs observed across the economy. Analysis of the comments from respondents who consider prices to be high reveals a predominant concern over rising living costs, the narrowing price gap between new and used flats, stagnant wages, and a general imbalance between supply and demand.

Perspectives of Those Who Feel Prices Are High

If we delve deeper into the feedback from those who consider prices high, several notable points emerge:

• - Many respondents express a tangible sense of price inflation.
• - Some have observed that the pricing disparity between new and used condos is diminishing, making investment in new properties less justifiable.
• - A prevalent sentiment is that while salaries have remained stagnant, housing prices continue to ascend, leading to an increased affordability issue.
• - Respondents also noted an apparent surge in prices compared to just a few years ago, signaling a rising market trend that is unsustainable in the long term.

Moreover, numerous comments support these observations, such as: “There are virtually no price differences compared to new condos,” and, “Given that salaries aren't increasing, the properties feel prohibitively expensive.” These comments reflect a stark disconnect between consumer income growth and escalating housing costs.

Views from a Minority Who Think Prices Are Low

Conversely, around 17% of respondents classified the prices as cheap. These buyers perceive several advantages in used condos:

• - Many feel that compared to new properties, used ones generally maintain more reasonable price points.
• - Emphasis on cost-performance was noted, demonstrating that for many, the value makes used properties more appealing investment options.
• - Some point out that regions outside urban centers provide more affordable options for used condominiums.
• - Older units, in particular, are often viewed as bargains.

This segment of opinions reveals an understanding that despite the overall high prices, used properties can offer substantial value, especially when viewed against new product offerings.

Recommendations for Potential Buyers on Timing

Looking ahead, the survey further examined the potentially advisable timing for purchasing a used condo. Remarkably, 38% of participants indicated that they believe the next six years would not present a favorable buying opportunity. The preferences outlined were:

• - Now to 1 year: 27%
• - Within 2 years: 9%
• - Within 3 years: 13%
• - Within 4 years: 3%
• - Within 5 years: 10%

This disparity in timing preferences reflects varying assessments of market conditions and individual strategies for capitalizing on real estate investments.

Analysis of Cautionary Responses

Many participants counselled patience, believing:

• - Inflation will persist, maintaining high pricing levels.
• - They anticipate a slump in the economy necessitating price reductions.
• - Uncertainty surrounding interest rate hikes poses further risks for potential buyers.
• - Changes in both international and domestic economic conditions have left individuals wary of making hasty decisions.

Responses like: “Current prices are too high,” and, “It's better to wait for economic recovery before proceeding,” highlight a cautious approach from consumers, reinforcing the need for a meticulous understanding of market dynamics before committing.

The Case for Early Purchase

Interestingly, a portion of respondents (approximately 27%) advocate for purchases within the next year, driven by concerns that:

• - Interest rates are likely to rise, catalyzing price escalation.
• - They project that purchasing now could hedge against future price hikes attributable to continuing inflation.
• - In the current economic climate, delaying might lead to missed advantageous positioning in the market.

Comments like, “I'm uncertain about future interest rates,” and, “Prices are expected to shoot up,” denote a strong inclination to act before financial conditions potentially worsen.

Mid-Term Considerations

Keeping a more expansive view, those who suggested a 2 to 5-year timeline framed their reasoning around:

• - Market stabilization which might lead to corrected pricing.
• - Expected adjustments in the real estate sector caused by rising interest triggering decreases in demand.
• - The optimism that increased availability of new housing stock will favorably affect used property prices in the near future.

Conclusion: The survey illustrates the varied perspectives surrounding the used condo market in Japan, highlighting the pressing need for a tailored approach to purchasing decisions. With rising prices and consumer sentiments fluctuating, the essence lies in monitoring the market closely, aligning decision-making with holistic financial planning, and engaging expert consultation for informed real estate investments.