Soaring Tokyo Real Estate Costs: Mie Kawamata desired a house with a yard for her daughter to play and a small garden. When she found a house near downtown Tokyo and easy to reach, her dreams came true. Because the search was endless, Kawamata and her husband, both accountants, had to give up on their dream of owning a home. Instead, they chose a smaller apartment, only a third the size of the desired big house.
Kawamata, 31, said, “Regular people can’t buy a house now.” Housing prices and rents are rising while wages remain stagnant, creating an affordability gap.
Japan has faced deflation and slow growth for years, but now it’s attracting more investment, making it difficult for young Japanese workers to find apartments in central Tokyo. According to the Real Estate Economic Institute, investment has caused the average price of a new condo in downtown Tokyo to increase by 60%, reaching 129.6 million yen ($865,000) in the first half of this year.
A UBS study found Tokyo is the second most expensive city for locals, after Hong Kong. In Tokyo, a 60-square-meter apartment costs 15 times a trained worker’s salary. This is a surprising change from a decade ago, when the ratio was 10 times. UBS study shows this number is larger than London, Singapore, and New York real estate markets.
Foreign buyers are raising prices due to the weak yen, at its lowest level in 33 years. This is happening partly due to historically low interest rates. Real estate experts say people are sending money to Japan due to concerns about a real estate crisis and political unrest in China.
Consultant Cushman & Wakefield reports 1.8 trillion yen invested by foreign investors in Japanese real estate since 2019. This exceeds investments from businesses, property funds, and institutional investors. With money from investors and Japan’s rising popularity in Asia, more people are likely to visit.
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Mari Kumagai of Cushman & Wakefield suggests Australia, Singapore, or Japan as the top choices for spending money in Asia-Pacific. Japan is fascinating due to its stable ideals and large economy.
In the past year, condo prices in downtown Tokyo have risen. This is due to many high-end homes being listed. The Azabudai Hills complex is a prime example of this trend. It has around 1,400 apartments and the country’s tallest office building.
Taiwanese investors eye Azabudai project, taller than Tokyo Tower. President of Shingi-fusaya Realty Inc. Wang Mao San noticed rich Taiwanese buying Tokyo homes over 100 million yen. Regular buyers now focus on condos priced between 30 and 70 million yen in Tokyo and Osaka.
Wang says Japan’s draw is its stable government and economy. Compared to cities like Hong Kong and London, Tokyo is still affordable. According to the Japan Real Estate Institute, a luxury flat in Tokyo’s Motoazabu neighborhood costs less than half as much as one in Hong Kong and 45% less than one in London.
Mari Mochizuki is a single mother and sales rep for a music company. She finds little comfort in these numbers. She’s searching for a spacious apartment for her piano and maybe a cat, but she’s torn between expensive options and run-down ones. The 39-year-old woman must choose between expensive options in the city center or older ones in the north of the capital to find a home that retains its value.
In her reflection, Mochizuki says, “Prices are rising for every decent-sized apartment, even those in remote areas or with cheap interiors.”
Our Reader’s Queries
Why is Tokyo real estate so expensive?
Tokyo’s reputation as a top financial center and cultural hotspot lures in a constant flow of foreign investors and expats. This global interest, especially for luxurious properties in the heart of the city, drives up real estate prices across Tokyo.
Is buying property in Tokyo a good investment?
Investing in Tokyo real estate offers a significant advantage of stable and predictable income. The rental market in Japan is renowned for its long-term leases, which can last up to two years, providing investors with a reliable source of income. This makes it an attractive investment option for those seeking a steady stream of revenue.
Are house prices in Japan rising?
The cost of flats in Tokyo has surged, reaching the same level as during the asset price bubble’s peak. Similarly, other cities in Japan have experienced a significant increase in property values since 2019, thanks to the availability of low-cost mortgages.
How much does a house cost in Tokyo?
The cost of a small apartment or condo in Tokyo can range from ¥50-100 million (about $455,000-$910,000 USD), depending on various factors. On the other hand, a larger single-family home in a prime location can cost ¥100 million or more (about $910,000 USD or more).