Japan’s house price increases moderating

House prices in Tokyo were up 4.8% during 2022

The average price of existing condominiums in Tokyo rose by 4.8% (inflation-adjusted) in 2022 from a year earlier, a sharp slowdown from a year-on-year increase of 10.65% in the prior year. During the latest quarter, existing condo prices increased slightly by 0.24% q-o-q.

In the primary market, the average price of new condos in Tokyo was up by a modest 3.55% (inflation-adjusted) during 2022, an improvement from an annual decline of 4.47% in 2021. On a quarterly basis, new condo prices dropped by a huge 15.05% in Q4 2022.

Demand slowing; construction activity stable

Existing condominium sales in Tokyo fell by 10.8% y-o-y to 35,698 units in 2022, following an 11% increase in 2021, according to The Land Institute of Japan. Likewise, sales of existing detached houses in Tokyo dropped 13.1% to 18,054 units in 2022 from a year earlier, in contrast to a 5.2% growth during 2021.

In 2022, dwelling starts in Japan rose slightly by 0.3% y-o-y to 859,331 units, following an annual increase of 5% in 2021, and y-o-y declines of 9.9% in 2020 and 4% in 2019. 

Rents, rental yields: moderately good yields in Tokyo, at 3.06% to 7.21%

Recent news: The Japanese economy grew by 1.1% in 2022 from a year earlier, a slowdown from an expansion of 2.1% in 2021, reflecting weak private consumption, slowing business investment, and a surge in imports due to the continuous depreciation in yen.

The International Monetary Fund (IMF) expects Japan’s economy to advance 1.8% this year, a slight upgrade from its earlier forecast of a 1.6% growth, after the government relaxed pandemic-related restrictions, reopened borders, and introduced policies to support economic activity.