Japan House Price

In February 2017, Residential Property prices registered an all time high growth of 4.5% YoY, marginally higher than the 4.3% recorded in the previous month.

Published monthly by Ministry of Land, Infrastructure, Transport and Tourism, and Japan Real Estate Institute. Updated to the month of February 2017 (published on May 31st, 2017).

Recent data trend:

Residential Property Prices Index(RPPI) marked a second consecutive rise in February, rising by an all time high of 4.5% year on year (YoY). The rise in the residential property prices was marginally higher than the 4.3% YoY growth in the previous month. The growth in prices in February was partially due to a lower base effect.

By sub-sectors, both price indices for condominiums and for residential land recorded a rise of 5.3% YoY and 6.3% YoY, respectively.The index for condominium prices have risen by almost 31.8% since February 2013.

By area, the residential property prices in Tokyo rose by 5.6% YoY in February 2017. Since early 2013, residential property prices in Tokyo have risen by around 21.3%.

While the RPPI confirms the rise in real estate price in the first 2 months of 2017, more recent anecdotal evidence suggests that the real estate price may be peaking out. We will see if the future releases of RPPI indices indeed confirms such change in the residential real estate market. Despite the recent data on industrial production and retail sales pointing towards improvement in consumption in the Japanese economy, the core inflation has remained stubbornly close to zero.

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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