See How COVID-19 Influences the Pre-Owned Property Market from the Latest Sales Data
There are so many reports evaluating the influences COVID-19 has on various industries. As the property owners, we also wonder how COVID-19 has been influencing the pre-owned property market. This time, let us take a look at the sales of pre-owned properties released by the Real Estate Transaction Promotion Center on 10th June, to see if we can generate some insights.
1. Number of Pre-owned Property Transaction
In general, the numbers have decreased significantly.
Figure 1: Number of pre-owned property transaction
Per the article we launched last month, compared to April 2019, the number of sales in April 2020 decreased by 33% in Hokkaido, 56% in Tokyo, 52% in Kanagawa, 42% in Osaka, 33% in Fukuoka, and 38% in Okinawa. The rate of decrease in May has eased slightly compared to the rate in April. However, the decrease is still significant.
The state of emergency was declared on February 28 by the Governor of Hokkaido and subsequently, on April 7 the national-wide state of emergency was announced. Even though the state of emergency has been lifted on May 25, its impact on the data in May has been shown. Also, it is clear that the number of pre-owned property sales in June, which will be announced next month, will still decrease significantly compared to the number in June 2019.
2. Unit price per ㎡ for sold pre-owned properties
Next, let’s see Compared to the unit price per square meter of sold pre-owned properties in May 2019, (Figure 2)
Figure 2: Unit price per square meter of pre-owned property transaction
Per the article from last month, compared to April 2019, the unit price per square meter in April 2020 decreased by 13% in Hokkaido, 1% in Tokyo, 3% lower in Kanagawa, 1% in Osaka, 2% lower in Fukuoka, and 4% in Okinawa. It seems that prices have decreased further except for Tokyo.
To understand more about the background, let’s take a look at the average age of properties for sale. In Hokkaido, the average house age was 29.0 years in May 2020. Compared to the average house age 24.9 years in May 2019, it was . In Osaka, similarly, the average house age was 26.6 years in May 2020. Compared to the average house age 24.2 years in May 2019, it is In Okinawa, the house average age in May 2020 was compared with it in May 2020. The house age may be one influence on the decline in unit price per square meter. (Figure 3)
Figure 3: Average age of pre-owned property for sale
Therefore, it seems that the price declines in Hokkaido, Osaka and Okinawa are not fully due to the influence of COVID-19. Although the decreased number of pre-owned property transactions was directly affected by the economic activity being virtually stopped because of the declaration of emergency, the house age can also be a factor for the decline in price.
Although the state of emergency has been lifted, economic activity is not going back to normal immediately but instead, slowly resuming. The number of transactions will continue to decline, and the impact on prices will decrease gradually together with the slow recovery in economic activity.
Remote work is expected to continue to a certain extent even after the lift of state of emergency. In the past, people who chose to live in the vicinity of the workplace will now consider the places that are most effective for themselves and their families. Therefore, people who buy non-workplace neighborhoods are bound to increase. The change in way of thinking when purchasing a property may start showing its influence to the market.
We would like to keep closer eyes on the market trend and keep sharing the information that will be useful to every one of our clients. Hopefully, you have generated some great insights together with us!