6. Likely Pathway of Property Prices in Tokyo
Finally, when asked to select a likely pathway of property prices in Tokyo, "Go sideways for a while and decline before or after the 2020 Tokyo Olympic Games and thereafter" ranked first, selected by 40.2% of respondents (Chart-9).
For a while, considering the recent equity market recovery and the BOJ attempting to adjust 10-year-bond yields to around 0%, the concern about property price decline is quite limited with "Go sideways" and "Appreciate for a while" selected by about two-thirds and one-third of respondents, respectively.
However, regarding property prices before or after the 2020 Tokyo Olympic Games, the responses anticipating a property price decline accounted for more than 70% of responses. Glut of office supply is scheduled in 2018, 2019 and 2020, and the consumption tax rate hike to 10% is scheduled in October 2019. Around that time, exit measures of the monetary easing policy should be discussed. Besides these, not a few investors who bought properties expecting price appreciation until the 2020 Tokyo Olympic Games should consider selling out.
Regarding property prices for the long term, "decline thereafter" accounted for nearly 80% of responses. It seems few players expect the Olympic event to make Tokyo more competitive as an international city or future inflation to support property prices for the long term. As the Tokyo metropolitan government forecasts the population of Tokyo will begin to decline after 2020, it seems structurally difficult to expect property prices to appreciate for the long term.