Apr 28, 2021 (Nikkei) - Signs of a K-shaped recovery, characterized by parts of the economy improving while others languish, are appearing in home prices.
Japan's housing market is divided: Prices in urban centers are rising on the back of high-income earners but drop off dramatically in outlying areas. Middle- and low-income earners are holding back on purchases or even selling their homes.
Widening income gaps are behind the polarized market. High-income earners generally have more stable salaries from large companies even amid the coronavirus and have seen their assets increase in value thanks to rising stock prices.
In contrast, non-regular employees in the food and service sectors are struggling under the prolonged COVID-19 crisis. These people have been the hardest hit by the loss of jobs and wage cuts, and will continue to face increasingly harsh economic conditions.
While prices of expensive condos in urban centers are rising, inexpensive single-family homes in outlying areas are falling as a result of weak demand. Home prices showing this K-shaped movement reflect the income gap.
A double-income couple in their 30s made a snap decision to buy an apartment in a four-year-old condominium in the heart of Tokyo because "there was no room for negotiating price cuts." Although the apartment was priced at 88 million yen ($815,721), nearly 20 million yen higher than when the condo was put on the market as a brand-new building, many people were willing to buy it.
The couple made the decision partly because of their profitable stock investments.
High-priced residential units are selling strongly in large metropolitan areas. An analysis by Nikkei of data released by the Ministry of Land, Infrastructure, Transport and Tourism on 530,000 real estate transactions found sharp price increases in central Tokyo. In Minato and Chiyoda wards, for example, home prices per sq. meters in the April-September period of 2020 jumped more than 10%, or double the average of rises in the past five years.
Home prices across the country show a different picture, as the nationwide average of prices in the six months dropped 6.2% from a year earlier. The number of homes that changed hands logged a 14% fall, reflecting the impact of the coronavirus crisis.
