Tokyo, Japan According to the latest figures from the Real Estate Economic Institute, the Greater Tokyo Area (GTA) saw a notable pullback in new condominium launches in October, marking the first monthly drop after four consecutive months of growth.
Key Figures & Trends
- New Launches: In October, the GTA registered 1,316 new condo units, a 28.2% year-on-year decline.
- Regional Breakdown: The decrease was especially stark in Tokyo’s 23 wards, which launched only 535 units a 34.4% drop from the previous year.
- In Chiba Prefecture, new condo launches collapsed by 76.6% (only 100 units).
- By contrast, other areas bucked the trend: non-ward Tokyo (+24.5%), Kanagawa (+9.6%), and Saitama (+37.0%) all saw increases.
- Sales Momentum Slows: The initial contract rate — a measure of how many units are sold in the first month of launch fell to 63.0%, down 20.3 percentage points from a year earlier.
- Prices Still Rising: Despite the volume drop, average unit prices climbed to ¥98.95 million, up 7.1% year-on-year, and the price per square meter surged to ¥1.538 million, up 11.5%.
- Unsold Inventory: At the end of October, there were 5,495 unsold units in the GTA a decline of 384 units from September.
- Outlook: The institute projects that around 3,000 new units might be launched in November.
Analysis: What’s Behind the Pullback?
- Buyer Absorption Slowing
- The slump in the initial contract rate to 63% suggests weaker immediate demand. In many global markets, a rate around 70% is seen as a healthy absorption level; anything below may signal that buyers are more cautious.
- This could reflect concerns over affordability, tighter lending conditions, or a saturation of high-end offerings.
- Price Pressures Remain Strong
- Prices continue to rise sharply, even as launches drop — a sign that developers are still targeting the high end of the market, or perhaps that construction costs remain elevated.
- The strong price per square meter growth suggests that buyers may be increasingly focused on premium or centrally-located units.
- Inventory Still Elevated
- While some unsold units have been cleared (down by ~384), the absolute number remains high (5,495), which may be weighing on developers’ willingness to launch more aggressively in the short term.
- Regional Shifts
- The drop is not uniform: while central Tokyo (23 wards) and Chiba saw steep declines, neighboring prefectures like Kanagawa and Saitama are seeing growth in new supply. This may indicate a geographic reorientation by developers shifting focus to more affordable or growing suburban markets.
- Long-Term Supply Constraints
- According to other market observers, 2025 marks the fourth consecutive year of supply decline in the metropolitan area.
- Such structural supply constraints could help sustain long-term price increases, even if monthly launches fluctuate.
Implications for Stakeholders
- For Buyers:
- The slowdown in launches could be a double-edged sword. On one hand, fewer new homes may reduce choice. On the other, cooling launches might make room for more favorable negotiations, especially if developers become more cautious.
- Rising prices mean that affordability will remain a critical issue, particularly for first-time buyers or those targeting central Tokyo.
- For Developers:
- The decline in contract rates could pressure developers to reassess pricing strategies, launch timing, or product mix.
- High unsold inventories may lead to a more cautious or phased release strategy in upcoming months.
- For Investors:
- With sustained price growth but weakening launch volumes, investors may need to evaluate liquidity risk: will the high-end units being released now find buyers quickly?
- Geographical trends (e.g., growth in Kanagawa / Saitama) may offer better opportunities for long-term appreciation compared to ultra-central Tokyo.
Broader Market Context
- Data from Haseko Research Institute confirms a drop in first-month sales rates and rising prices.
- Over the first half of 2025, the metropolitan area saw a 11.2% drop in condo supply compared to the previous year the fourth straight year of supply decline on a half-year basis.
- According to Kantei’s data, new-build average unit prices remain very high, reflecting sustained developer focus on the upper segment of the market.
Conclusion
The October pullback in Greater Tokyo’s new condo launches a 28.2% year-on-year decline marks a notable shift in momentum. While long-term supply constraints and rising prices continue to support the market structurally, the drop in monthly launches and initial contract rates points to growing caution among both developers and buyers.
For now, the market seems to be navigating a delicate balance: strong pricing power but cooling demand. How this evolves over the next few months especially into year-end will be critical for gauging whether this slowdown is a temporary blip or the start of a larger trend.
