While housing prices continued to rise, housing starts and new condominium sales declined in the fourth quarter.
Housing starts shrank by 1.3% y-o-y to 75.4k units in December, however, the number recovered by 1.9% to 909k units for the whole year in 2015 from the negative growth due to the consumption tax hike in 2014 (Chart-3). Housing starts of apartments for lease increased by 4.6% y-o-y for the fourth consecutive year and those of condominiums increased by 4.7% after the negative growth in 2014.
New condominium units sold in the Tokyo metropolitan area decreased by 9.9% y-o-y to 40,449 units in 2015. The average unit price rose by 9.1% to 55.18 million JPY, the highest level since 1991. Real Estate Economic Institute forecasts a 6.3% y-o-y increase of sales to 43,000 units in 2016 (Chart-4).
According to Real Estate Information Network Systems, the transaction volume in the secondary condominium market in the Tokyo metropolitan area increased by 5.1% y-o-y to 8,391 units in the fourth quarter and by 2.9% to 34.8k units in 2015 (Chart-5). The average transaction price rose by 6.1% y-o-y to 28.92 million JPY for the third consecutive year.
The Home Price Indices in the Tokyo metropolitan area by Japan Real Estate Institute appreciated m-o-m for the seventh consecutive month and y-o-y for the sixth consecutive month in November (Chart-6).
One of key factors for the housing market hereafter is how much mortgage rates will be affected by the negative interest rate policy introduced in February 2016. Furthermore, the government is preparing supporting measures for home buyers such as subsidy increases or enlarging inheritance tax exemptions before the consumption tax hike scheduled for April 2017. On the other hand, the tax authority is considering a review on inheritance tax conditions to prevent luxury condominiums from being abused for minimizing taxable bases.