If house prices go up, it’s a negative material that makes it difficult for people who are thinking of buying, but it’s a blessing for those who are thinking of selling it. If you can’t buy it if you don’t sell it cheaper than the price you bought, it’s easy to get a second step, but if you get a profit, you’ll feel like you’re going to take the plunge and replace it.
The number of people who make a positive difference in sales is increasing year by year.
The Real Estate Distribution Management Association, a major and medium-sized real estate brokerage company, conducts a consumer trend survey on the real estate distribution industry every year for people who actually buy and sell houses. Among them, there is a survey item that asked whether the profit from the sale was made to the person who sold my home.
According to the figure 1, 83.4% of respondents said that a “negative sell-off difference occurred” in the 2013 survey, which had to be sold cheaper than the acquisition price. Most people couldn’t buy it if they didn’t sell it in the red.
This has increased the percentage of “negative sales differences” year by year, and on the other hand, the “positive sales difference occurs”. The “negative sale difference” fell to 70 in FISCAL 2015 and 60% in FISCAL 2016, and 55.2% in FISCAL 2019.
Instead, the “positive sales difference occurred” increased to 20% in fiscal 2015, compared to 10 in fiscal 2013, and increased by nearly 4 percent from 37.8% in fiscal 2019.
Whether or not the profit from the sale will have a big impact on the age of the building.
At this pace, if the “positive sale difference occurred” increased, the majority of people would have been positive, exceeding the amount of the early seventies.
Recently, the average purchase amount has been reduced year by year by the difference in the average amount of the sale.
The average price of a person who bought a new property at the time of purchase in fiscal 2013 was 3,717.5 million yen, whereas the average sale price was 2,820.7 million yen, and the difference was close to 9 million yen, but in fiscal 2018 the difference between the two was reduced to approximately 5.6 million yen, and in fiscal 2019 it was about 3.61 million yen.
If the economy continued to recover as it was, we could expect that the price of second-hand apartments would rise one step further, and that the day would finally come when we would reverse.
The Corona crisis could lead to a negative margin again.
However, it may be that we will be affected by the spread of the new coronavirus infection in 2020. In some cases, it is likely to backdown.
Therefore, the person who is thinking about selling or replacing it might want to take action before the price of the second-hand apartment in full scale falls, but whether the profit comes out depends on the age of the current residence.
The figure above shows the change in the average price of new condominiums in the Tokyo metropolitan area and the average price by the age band of the current second-hand condominium. The blue line chart shows the average price of new condominiums for each year. Although it rose rapidly during the bubble period until 1990 and then declined, it continued to rise in recent years, with an average of 59.8 million yen in 2019.
The person who acquired it in the bubble period still has a deficit of 30 million yen.
On the other hand, the orange horizontal line is the average price of a used condominium built for 0-5 years, according to the East Japan Real Estate Distribution Organization. Since it sells for an average of 56.19 million yen, it will be a little negative in two or three years of construction, but if it is four years or five years, it will be a slight plus.
The gray horizontal line is the average price of 11-15 years. Because it can be sold for 43.91 million yen, since the average price of the new apartment for the person who bought it in 2004 was 41,040,000 yen, the profit from the sale comes out, but the average price of the new condominium is 47.75 million yen when it is acquired in 2008, and it becomes a slight minus when it is a sale price of 43.91 million yen. The profit and loss account slightly varies depending on the acquisition year.
However, the longer the year, the greater the negative width. In the 21-25 years, the deficit is more than 10 million yen, and even more than 31 years of construction, the deficit is still millions of yen.
It is not here, but it seems that the minus of 30 million yen or more still occurs because the acquisition price is high anyway when it is an apartment house of 26-30 years which was built during the bubble period.
In some cases it will take some time for the loss to be eliminated.
This is almost in line with the findings of the Real Estate Distribution Management Association. Take a look at the chart below.
This indicates the ratio of “negative sales difference occurrence” and “positive sale difference” by year-end band. For properties that are built within five years, half of them will be “positive sales difference”, and within five to ten years of construction, the “positive sale difference occurs” increases to 56.5″,, but then the percentage of “positive sales difference” decreases. About 20 years ago, the “positive sale difference” would be only 20%.
Even in this age zone, some properties generate profits from the sale, but in order to turn to positive as a whole, it is necessary to raise the price of second-hand condominiums a little more. However, in the current situation where the effects of the new coronavirus infection are likely to spread, it may be difficult to expect that for a while. Rather, there is a risk that the loss escalating, so if you are thinking of selling it sooner or later, it may be better to move to replace it with a low deficit.
*This article strives to provide easy-to-understand information, focusing on commentary based on the author’s latest knowledge and experience, but the content is not guaranteed by our company.
Author: Kazuyuki Yamashita