Japan House Price

Residential Property prices fell further by 0.4% MoM in December 2016 from a 0.6% fall in November 2016. This marks the third consecutive fall in the Residential Property prices indicating that upward momentum in the prices may be waning.

Published monthly by Ministry of Land, Infrastructure, Transport and Tourism, and Japan Real Estate Institute. Updated to the month of October 2016 (published on March 29th, 2017).

Recent data trend:

In December 2016, Residential Property Price Index (RPPI) fell by 0.4% month on month, marking the third consecutive monthly fall in the residential property prices. 

Since early 2013, residential property prices in Japan have been enjoying a moderate upturn, a nearly 10% price appreciation between early 2013 to mid 2016. However, 3 months of consecutive monthly decline may indicates that there is a possibility that the real estate boom may be coming to its close. 

By sub-sectors, both price indices for condominiums and for residential land have been falling for the last three months. The price index for detached house did rise in December 2016, but the fact is that the detached house price never rose in the first place.It was the condominiums that have led the upturn in prices in the last few years. The index for condominium prices have risen by almost 25% since early 2013. 

By area, Tokyo area was the chief beneficiary of the residential property boom, with the RPPI for Tokyo area rising by 21.6% since 2013. Outside Tokyo, northern part of Japan seems to have enjoyed the rise in property prices, especially Tohoku area where the demand supply balance for residential property must have tightened in the aftermath of the earthquake in 2011. On the other hand, southern parts of Japan are faring less well. 

We would like to closely monitor the price development in the next few months to conclude that property prices have begun to tread down south.

For more details, please read our report "A primer on the new house price index"

Brief overview of “House Price”

In Japan, the annually-published Land Market Value survey (Ko-ji Chika) has been the representative statistics for real estate prices. For 2013, it surveyed the prices of 26,000 land locations in Japan. However, the statistics suffers a number of shortcomings. The “price” in this survey is an evaluated price, rather than the actual transaction price. It is also a statistics of land price and it does not include price information for condominium. It is also an annual survey, lacking in timeliness.   

The Japanese government developed a new statistics on house prices to fill the gap. The statistics, officially known as “Residential Property Price Index (RPPI)”, is published monthly and it is based on actual transaction data. In order to capture the trend in the market value of houses, the raw data are processed through Hedonic regression to control for the difference in factors such as location. The compiled statistics starting in April 2008 were initially released in August 2012 and currently in a full operational phase starting from March 2015. The RPPI consists of 3 sub-indices, one price index for residential land, second price index for detached house, and third price index for condominiums. National as well as a number of regional indices are available. In the last 5 years, RPPI has fallen sharply through 2008-09 but started improving after 2013. On the other hand, one of its sub-components, price index for condominiums, started to rebound as early in late 2009 and the index is currently renewing the highest level since the index started in 2008.

For more information visit the official government page.

The Next Release Date: 

House Price by Regions 1 (Hokkaido, Tohoku, Kanto)  

House Price by Regions 2 (Hokuriku, Chubu, Kinki)  

House Price by Regions 3 (Chugoku, Shikoku, Kyushu-Okinawa)  

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