House prices in Tokyo were up 10.12% during the year to Q3 2021

The average price of existing condominiums in Tokyo rose strongly by 10.12% (inflation-adjusted) in Q3 2021 from a year earlier, a sharp improvement from the previous year’s 3.97% increase. During the latest quarter, existing condo prices increased by 3.65%.

Likewise, the average price of new condos in Tokyo soared by 11.89% during the year to Q3 2021, in contrast to the prior year’s 4.04% fall. On a quarterly basis, new condo prices rose by 4.07% in Q3.

Demand rising; construction activity improving

Existing condominium sales in Tokyo rose strongly by 12.8% to 33,678 units in the first ten months of 2021 from a year earlier, following a 5.9% fall in 2020, according to The Land Institute of Japan. Likewise, sales of existing detached houses in Tokyo rose by 7.3% y-o-y to 17,644 units over the same period. 

From January to October 2021, dwelling starts in Japan rose by 5.3% y-o-y to 714,677 units, following annual declines of 9.9% in 2020 and 4% in 2019.

Rents, rental yields: poor yields at 2.66%

Tokyo apartment costs are high, at around $16,322 per sq. m. 

Japan: typical city centre apartment buying price, monthly rent (120 sq. m)
  Buying price Rate per month Yield
Tokyo $1,958,640 $4,346 2.66%

Recent news: The Japanese economy contracted by an annualized 3% in Q3 2021, following a 1.5% growth in the previous quarter, amidst the recent reimposition of coronavirus emergency curbs in Tokyo. This prompted the International Monetary Fund (IMF) to cut again its 2021 growth projection for Japan to 2.4% from its earlier estimate of a 2.8% expansion. 

During 2020, the economy shrank 4.8%, the biggest contraction since 2009, as the COVID-19 pandemic adversely affected domestic consumption, as well as exports. But even before the pandemic, the Japanese economy had been adversely affected by the US-China trade tension and the introduction of a consumption tax hike from 8% to 10% in 2019.