- Seriously affected by the global financial crisis, falls in Japan’s residential property prices accelerated during the first half of 2009. The urban land price in Japan’s six largest cities dropped by 7.8% (9.2% in real terms) in H1 2009 from the previous year, according to the Japan Real Estate Institute (JREI), ending the long-anticipated recovery of Japanese property prices.
- The global financial crisis upset Japan’s real estate sector. Bankruptcies in real estate firms increased in H1 2009. Investors in Japanese real estate investment trust funds (J-REIT) have fled the market, leading to a huge drop in demand.
- New building permits in 2008 continued to be below 2006 levels, due to tighter constructions laws. Banks remained extremely cautious, making it difficult for buyers and developers to acquire loans.
- The economy however grew in Q2 2009 after four consecutive months of contraction due to the aggressive government stimulus and tax reforms.
The global financial crisis and Japan’s recession bit hard in 2008. Land sales noticeably dropped by 10.1% in 2008, while Tokyo land sales registrations dropped no less than 15.7%. Sales in Osaka and other cities also slid, falling by 8.5% and 7.6% in 2008, respectively.
Condominium sales in Tokyo continued to drop in 2009, declining by an average of 19.4% from January 2009 to August 2009 from the same period last year, according to data from the Real Estate Economic Institute. This followed the 28.3% drop in condominium sales in 2008. Sales in Tokyo have been declining since 2004, when 85,000 condominium units were sold.
- Real estate developers and investors have been heavily affected. Bankruptcies in the real estate sector rose by 41%, to 284 firms in H1 2009 from the same period last year, according to Teikoku Databank.
- as of September 2009, the TSE-REIT Index is 64% below its peak.
- The number of new projects has dropped due to the new laws. Housing starts in 2008 were 15.3% below the 1.3 million registered housing starts in 2006. Housing starts are expected to fall again in 2009. From January 2009 to August 2009, registered housing starts dropped by an average of 28.8%, according to data from the Ministry of Land, Infrastructure and Transport (MLIT).
- Japanese non-performing loans (NPL) ratios are low, largely because of reforms enacted by Junichiro Koizumi, prime minister from 2001 to 2006. From a high of 8.7% in March 2002, the ratio of NPLs to total loans decreased to 1.4% in March 2008, according to the Financial Services Authority (FSA). Due to the global financial crisis, the ratio of NPLs to total loans increased to 1.7% in September 2009.
- Despite the rental market issues, the average rental yield for residential properties in Tokyo was 5.5% in March 2009, according to Global Property Guide research. A 40 sq. m. apartment generates the highest yield of 5.9%, while a 250 sq. m. apartment only yields 5.2%.
Japan’s economy grew 2.3% in Q2 2009 from the previous quarter. The recovery is due to the government’s three stimulus packages, which have pumped a total of JPY29.4 trillion (USD301 billion) into the economy. Public investment increased by 33.6% in Q2 2009 from the previous quarter. Foreign demand returned as exports increased by 28.1% in Q2 2009 from the previous year, following the 63.9% plunge in exports in Q1 2009.
Despite the growth, the economy is expected to contract by 5.2% in 2009, according to the IMF. Private investment and private demand fell by 17.9% and 6.5% in Q2 2009 from the previous quarter.
Deflation accelerated to 2.2% in August 2009. Unemployment rose to 5.7% in July 2009, with around 3.8 million unemployed.
http://www.globalpropertyguide.com/Asia/Japan/Price-History
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