In recent years, Japan’s real estate market has undergone significant transformation. According to the Real Estate Price Index published by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), housing prices have been on a consistent upward trend since 2020, with the surge most notable in urban centers.
In the Tokyo metropolitan area, condominium prices have skyrocketed. In 2023, the average price of new apartments in central Tokyo exceeded 100 million yen per unit in some cases — roughly 1.5 times higher than a decade ago, setting new historical records. Even in the secondary market, strong demand continues to drive prices upward, and the number of transactions remains steady.
In contrast, regional cities and suburban areas are experiencing different dynamics. While residential land prices in Tokyo’s 23 wards posted year-on-year growth of over +5%, many regional areas recorded increases of less than +1%, and some even declined. The effects of population decline and the growing issue of vacant homes are evident, suppressing demand and putting downward pressure on prices. This widening gap between major cities and rural regions has become one of the most significant characteristics of Japan’s real estate market.
Low interest rates have also played a crucial role in sustaining demand. Fixed mortgage rates remain in the 1% range, making home ownership more accessible and fueling continued buying interest. Additionally, inbound demand and foreign investment have added momentum, especially in central areas of Tokyo and Osaka where purchases for investment purposes are particularly notable.
Looking ahead, several key factors will shape the market: demographic shifts, slower economic growth, and the flow of international investment capital. While demand in urban centers is expected to remain strong, regional markets are likely to see increasing polarization, with clear differences emerging between areas with growing demand and those struggling with depopulation.
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