Is now a bad time to buy a home in Japan?

Get all the data you need about the real estate market in Japan

Is now actually a bad time to buy a home in Japan?

Buying a home in Japan today is clearly harder to justify than it was during the ultra-low-rate years, but we would still buy the right resale property in the right city rather than wait automatically.

Three things have changed at once. Mortgage rates have moved up sharply, new homes in central Tokyo have become extraordinarily expensive, and the resale market is finally giving buyers more room to negotiate.

The financing change is already concrete. Mitsubishi UFJ Bank currently advertises a 1.195% variable rate for qualifying new mortgage borrowers, alongside 3.63% for a 10-year fixed period and 4.30% for a 31-to-35-year fully fixed loan. A few years ago, variable mortgage rates below 0.5% were common enough that interest barely influenced many purchase decisions. That era has ended.

Prices have been slower to react. According to the Real Estate Economic Institute, the average new condominium in Tokyo's 23 wards cost ¥142.49 million in the first half of 2026, up 9.1% from a year earlier. Yet the latest East Japan REINS data already show something different in resale housing: Greater Tokyo transactions fell 8.6% year on year while unsold inventory rose 5.5%.

That is where buyers are gaining ground. Sellers have lost some leverage before headline prices have fallen very far.

So we would be much more reluctant to stretch for a ¥140 million new Tokyo apartment today. A fairly priced resale home near a useful station, bought with a long holding period and a mortgage that still works if rates rise further, is a very different decision.

What buyers face now	Latest reading	Direction	Our take
MUFG variable mortgage	1.195%	Higher	Still manageable
MUFG 10-year fixed	3.63%	Much higher	Expensive by Japanese standards
Tokyo 23-ward new condo average	¥142.49m	+9.1% YoY	Hard to justify for ordinary buyers
Greater Tokyo resale contracts	-8.6% YoY	Falling	Buyers have more leverage
Greater Tokyo resale inventory	+5.5% YoY	Rising	More choice

Why is buying a home in Japan unusually tricky right now?

Buying a home in Japan is tricky right now because financing has already become more expensive while the strongest urban property markets have barely repriced.

Normally, higher borrowing costs weaken what buyers can pay. Japan is going through that adjustment slowly.

The Bank of Japan has lifted its short-term policy rate to around 1%, a level Japan had not seen for decades. Banks have passed part of that increase through to mortgage borrowers. At the same time, Tokyo land and new-build condominium prices remain high.

There is no obvious wave of forced sellers either. Japan's unemployment rate remains around 2.5%, wages have been improving, and household credit stress is still limited. Owners who do not need to sell can simply wait.

Geography makes the picture even messier. Central Tokyo still benefits from concentrated employment, high incomes, transit access and international demand. Thousands of municipalities elsewhere are losing population.

So several housing markets are moving in opposite directions inside the same country. A national call such as “Japan is too expensive” tells buyers very little.

Have Japanese home loans become expensive now?

Japanese home loans have become genuinely expensive compared with what Japanese buyers were used to, especially if they want fixed-rate protection.

The jump is easiest to understand through monthly payments.

Take a ¥50 million mortgage amortized over 35 years. At 0.345%, a rate representative of the old ultra-cheap environment, the theoretical payment is about ¥126,000 a month. At today's 1.195% MUFG variable offer, it is roughly ¥146,000.

Move to a 3.63% rate and the same loan costs around ¥210,000 a month. At 4.30%, it approaches ¥230,000.

So a buyer choosing long-term rate certainty can now pay around ¥100,000 more every month than someone borrowing the same principal at the ultra-low rates available earlier in the cycle.

Japan's housing-loan tax deduction softens the hit for qualifying owner-occupiers. Depending on the property and borrower, the current system can allow a 0.7% deduction on an eligible mortgage balance. Useful, yes. Large enough to rescue an overpriced purchase, no.

Financing has become one of the main parts of the buying decision again.

¥50m mortgage over 35 years	Approx. monthly payment	Difference vs 0.345%
0.345%	¥126,000	—
1.195%	¥146,000	+¥19,000
3.63%	¥210,000	+¥84,000
4.30%	¥230,000	+¥104,000

Could Japanese mortgage rates go much higher?

Japanese mortgage rates can still rise, and we think buyers taking a variable loan today should assume that they will.

The Bank of Japan has moved a long way from negative rates, but there is little evidence that policymakers have promised to stop at the current level. At a recent policy meeting, one board member was already arguing for a 1.25% short-term policy rate.

Banks are adjusting too. MUFG changed its variable mortgage benchmark again following an increase in its short-term prime rate. Today's advertised variable mortgage is a starting point, not a 35-year guarantee.

We would therefore run the household budget at something closer to 2% or above before signing a large variable mortgage. A buyer who is comfortable only at 1.195% is cutting things too fine.

There is an awkward trade-off here. Variable loans remain cheap enough to make buying workable, while fixed mortgages have already become expensive enough to discourage many households from locking in.

For now, the sensible response is less borrowing, a larger cash buffer or a cheaper property rather than assuming rates will quickly return to zero.

Are Tokyo home prices already too high?

Tokyo's new-build condominium prices are already too high for many normal owner-occupiers, and we would be very careful about treating today's averages as a reasonable entry point.

The Real Estate Economic Institute put the first-half average new-condominium price across Greater Tokyo at ¥101.35 million, 13.1% above the previous year. Inside Tokyo's 23 wards, the average reached ¥142.49 million.

Those numbers are partly distorted by expensive projects. New supply is increasingly concentrated toward wealthy buyers because developers face high land, material and labor costs and can make better economics on premium developments.

Even so, the affordability problem is real. A household earning ¥10 million a year is looking at an average 23-ward new condominium costing more than 14 times annual gross income before taxes, mortgage interest and ownership costs.

Resale Tokyo is less extreme. Recent REINS transactions show a much wider range of prices, particularly outside the central wards and among older buildings.

We would not use “Tokyo prices” as one category. A newly built Minato condominium and a 20-year-old apartment in Nerima may sit in the same city but belong to completely different affordability markets.

Is the Tokyo housing market finally starting to cool?

Tokyo's resale housing market is cooling now, although sellers have so far conceded more on transaction volume than on price.

The clearest evidence is how many deals are actually closing.

According to East Japan REINS, resale condominium contracts in Tokyo's 23 wards fell 17.2% year on year in July. Greater Tokyo overall recorded a decline of 8.6%.

Yet the transaction price per square metre in the 23 wards was still 2.7% above the previous year.

Buyers are increasingly refusing deals at today's terms, while enough sellers remain patient to keep completed prices relatively firm.

Inventory is where the balance begins to shift. Greater Tokyo had 47,151 resale condominium listings in the latest monthly data, 5.5% more than a year before. Published REINS-derived figures for Chiyoda, Chuo and Minato show a much steeper increase in available units.

We would read this as early buyer leverage rather than a price crash. Homes that would previously have sold quickly are sitting beside more competing listings, giving purchasers time to compare and negotiate.

Resale market measure	Latest change	What we see
Tokyo 23-ward contracts	-17.2% YoY	Clear demand slowdown
Tokyo 23-ward price per m²	+2.7% YoY	Sellers still holding price
Greater Tokyo contracts	-8.6% YoY	Cooling is broader than central Tokyo
Greater Tokyo inventory	+5.5% YoY	Choice is improving
Greater Tokyo average transaction price	slightly lower YoY	Some price softness has appeared

Should home buyers in Japan wait for prices to crash?

Waiting for a nationwide Japanese housing crash is a poor plan because the current weakness looks too uneven to produce one big reset across the country.

A serious property crash usually needs owners who have to sell. Japan does not currently have that pressure on a large scale. Employment is strong, household mortgage defaults are limited, banks are still lending, and new housing supply is constrained in expensive cities.

At the same time, some areas can absolutely fall.

Greater Tokyo resale activity is weakening. Certain suburban locations have already shown softer prices. Provincial markets with shrinking populations face a much longer-term problem because fewer households may want the same homes later.

Central Tokyo can behave differently. Limited supply, wealthy domestic buyers, foreign capital and high replacement costs make sharp discounts harder to force.

A buyer waiting for every part of Japan to fall 15% or 20% could spend years waiting for an event that never reaches the neighborhood they actually want.

We would wait when a specific property looks overpriced or when competing listings are multiplying. That is a much stronger reason than a broad prediction that “Japan housing has to crash.”

Are new homes in Japan a worse deal than resale homes right now?

For many buyers, Japanese resale homes currently offer better value than new homes because the new-build premium has become unusually large.

Developers are dealing with expensive construction, land and labor. Instead of producing huge volumes of cheaper apartments, they have increasingly concentrated supply on projects where buyers can absorb those costs.

Greater Tokyo produced only 7,989 new condominiums during the first half of 2026, 0.8% fewer than a year earlier, even while the average selling price jumped 13.1%.

High prices are not being created by an enormous speculative building boom. New supply is relatively tight and expensive to reproduce.

Resale owners operate under different economics. Someone who bought an apartment 15 years ago does not need to recover today's construction cost. That creates opportunities for buyers who are flexible about building age.

The catch is quality. Older Japanese condominiums need careful checks on seismic standards, repair reserves, management fees, planned major works and the condition of common areas.

A good 15- or 20-year-old apartment near a strong station can still be a much better purchase today than paying heavily for the word “new.”

Are cheap homes outside Tokyo actually bargains?

Cheap homes in regional Japan can be great places to live, but many are bad investments because there may be very few buyers when you eventually want to sell.

Japan's latest population census makes the scale of that risk unusually clear. The country's population fell to about 123.05 million, down roughly 3.1 million in five years.

More strikingly, population declined in 1,558 of Japan's 1,719 municipalities. That is 90.6% of them.

A ¥15 million or ¥20 million detached home can therefore look absurdly cheap beside Tokyo. The price often reflects weak future demand rather than an undiscovered bargain.

The distinction becomes obvious when we look at where people still concentrate. Tokyo, Kanagawa, Saitama and Chiba together contain almost 37 million residents, about 30% of the country's population.

So we would worry far more about a property's future buyer pool than its cheap sticker price.

A regional house can make excellent sense for someone who expects to live there permanently and values the lifestyle. We would be much more skeptical if the buyer expects strong appreciation or an easy exit after five years.

Does Japan's shrinking population make buying a home a bad idea?

Japan's shrinking population makes the wrong home much riskier, but desirable urban housing can still have plenty of demand because people are concentrating into fewer places and smaller households.

The demographic story is subtler than the headline population decline suggests.

While Japan lost roughly 2.5% of its population between the last two censuses, the preliminary census counted more than 57 million households, up about 2.3%.

Households matter for housing demand. Two adults separating into two households need more housing units even if the number of people has not increased. Japan's aging population and growing number of single-person households push in the same direction.

Geography then amplifies the split.

Most municipalities are shrinking, while Tokyo and other major employment centers continue to attract a disproportionate share of households, students and workers.

That is how Japan can simultaneously have abandoned homes in some towns and extremely expensive apartments around major stations.

For a buyer, national population decline is a warning to be picky about location rather than a reason to avoid Japanese property altogether.

Demographic measure	Latest census result	What it means for housing
Japan population	123.05m	National demand base is shrinking
Five-year population change	-3.10m	Decline is accelerating
Municipalities losing population	1,558 of 1,719	Weak local markets are widespread
Total households	over 57m	Housing demand has held up better
Household change	+2.3%	Smaller households partly offset decline
Greater Tokyo population	about 37m	Demand remains heavily concentrated

Are rising rents making it smarter to buy in Japan?

Rising rents are making homeownership more attractive in Japan's strongest cities, particularly for people who already know they will stay for years.

The rent market has become noticeably less comfortable for tenants.

At Home's recent asking-rent data showed year-on-year increases across every apartment-size category in all five parts of Greater Tokyo it tracks. In Tokyo's 23 wards, asking rents for 30-to-50-square-metre apartments had been setting new records month after month.

The trend is not limited to Tokyo. Large-city rental markets including Osaka, Kyoto, Nagoya, Kobe and Fukuoka have also recorded widespread increases.

That changes the cost of postponing a purchase.

Someone paying ¥150,000 a month in rent spends ¥9 million over five years before rent increases. That money buys flexibility and eliminates ownership risk, so calling it “wasted” would be silly. But waiting is clearly not free.

If rents keep climbing while the purchase price of a good resale home stays roughly flat, buying gradually becomes easier to justify.

We still would not buy an overpriced apartment merely to escape rent. The stronger case appears when the property is reasonably priced and the household already expects to remain in the area for a decade or more.

Are Japanese salaries keeping up with home prices?

Japanese wages are rising again, but they are nowhere near keeping pace with the cost of new homes in expensive parts of Tokyo.

Recent labor data have become more encouraging after years of weak pay growth. Nominal wages have been increasing, and real wage growth has periodically turned positive as salary increases caught up with inflation.

Japan's low unemployment rate also helps households absorb higher mortgage payments.

None of that closes the gap created by housing prices.

A ¥142 million apartment is expensive even for a household earning ¥15 million annually. Add a larger mortgage payment, management fees, repair reserves and property taxes, and affordability quickly becomes uncomfortable.

This is why the central Tokyo new-build market increasingly tells us more about affluent buyers than about what a typical salaried household can afford.

Wage growth helps the broader housing market. It is far too small to justify every price currently being asked in prime Tokyo.

Is buying in Tokyo safer than buying elsewhere in Japan?

Tokyo is currently safer for resale liquidity than most of Japan, but buyers pay a large premium for that safety.

The attraction is straightforward. Tokyo concentrates jobs, universities, transport, high-income households and investment capital. The latest official land-price data showed residential land across Tokyo rising 7.3%, with the 23 wards around 9.2%.

That is strong demand by any Japanese standard.

The price paid for that resilience is a much higher entry valuation. A buyer can choose a town where homes cost one quarter as much, but the future pool of buyers may also be dramatically smaller.

For owner-occupiers, we would therefore pay attention to the boring things that preserve liquidity: a short walk to a genuinely useful station, a normal floor plan, sensible building fees, good management and a neighborhood with stable household demand.

Prestige alone is less convincing. Paying an enormous premium for a fashionable tower or a record-setting project can overwhelm the advantage of owning in Tokyo.

The safer Tokyo purchase today is usually the home that another ordinary household would still want in ten years.

Do home buyers in Japan finally have room to negotiate?

Home buyers in Japan have noticeably more negotiating power now in the resale market, especially where listings are accumulating faster than completed sales.

The latest Greater Tokyo numbers are useful here because they measure actual market behavior rather than sentiment. Transactions are down while available resale stock is up.

That gives buyers something very practical: time.

During a fast market, a good apartment can disappear before a buyer has properly compared recent transactions or checked the building accounts. These days, more listings are competing for fewer completed deals.

We would exploit that by checking actual REINS transaction comparables, the property's listing history, previous asking-price reductions and how many similar units are available nearby.

A seller who has had three comparable apartments appear in the same building faces a very different negotiation from a seller holding the only unit for sale.

As pointed out above, completed prices in central Tokyo remain relatively firm. That makes negotiation more useful than waiting for a dramatic headline decline that may arrive late or never arrive at all.

Could waiting one or two years make a Japanese home cheaper?

Waiting one or two years could produce a cheaper purchase price, but we do not see enough evidence today to say that waiting will lower the total cost of buying.

Suppose a ¥60 million home falls 5%. The buyer saves ¥3 million on the purchase price.

Now change the mortgage.

A ¥50 million, 35-year loan at 1.2% costs roughly ¥146,000 per month. At 2%, it is about ¥166,000. The difference is around ¥20,000 each month, or roughly ¥2.4 million over ten years before considering the changing principal balance.

A buyer who rents while waiting may also pay several million yen during those two years.

Of course, the opposite scenario can happen. Inventory might keep rising, rates might stabilize and sellers could eventually accept larger discounts. That would reward patience.

Timing Japan solely by the calendar gives us very little edge.

We would wait for a better deal when the specific property looks overpriced or the local market is weakening quickly. When a good resale property is already fairly priced and the buyer can afford a tougher rate scenario, waiting for an arbitrary future year looks much less compelling.

Who should avoid buying a home in Japan right now?

Anyone planning to move again within a few years, borrowing at the edge of affordability or buying a weak regional property mainly because it looks cheap should probably stay out of the Japanese housing market for now.

Short holding periods are particularly dangerous because buying and selling property carries real friction. Brokerage fees, registration expenses, loan fees, taxes, moving costs and eventual selling costs can consume a meaningful percentage of the property's value.

A flat market can therefore still produce a loss after five years.

Highly leveraged variable-rate buyers face another problem. Borrowing costs have already moved sharply, and the cheapest rate today offers no guarantee about where repayments will be later in the mortgage.

Regional speculation brings a different risk: liquidity. A house can be worth ¥20 million on paper and still take a long time to sell if very few households want to live there.

Those buyers need favorable market conditions to bail them out. We would rather avoid putting ourselves in that position.

Who can still sensibly buy a home in Japan today?

A buyer who expects to stay for at least ten years, has plenty of room in the household budget and chooses a liquid resale property can still make a very sensible home purchase in Japan today.

The holding period does a lot of the work.

Over ten or fifteen years, transaction costs become less important, short-term price swings matter less and the buyer receives years of housing utility from the property.

Financial room matters just as much. We would want a large emergency buffer and enough income to handle a mortgage rate meaningfully above the initial variable offer.

Then comes the property itself.

Would another household want it later? Is the station useful? Is the walk acceptable? Does the layout work for normal buyers? Is the building properly maintained? Are repair reserves healthy? Is the surrounding area gaining or losing households?

Those questions sound mundane, but Japan's housing market rewards mundane properties with deep future demand.

Someone buying that kind of home for a long stay does not need to predict the next move in Japanese property prices perfectly.

So, is now a bad time to buy a home in Japan?

No. Now is a bad time to overpay for a home in Japan, especially a heavily financed new-build property, but it can be a good time to negotiate on quality resale housing.

The easy buying environment has clearly disappeared. Mortgage rates have risen. Fixed borrowing has become expensive. Central Tokyo new-build prices are stretched, while households can no longer assume that cheap money will make almost any purchase affordable.

Yet the market has also become more interesting for disciplined buyers.

Resale transactions are slowing, inventory is increasing and sellers face more competition. Rents are still rising in several strong cities. Japan's population decline continues to punish weak locations, but household demand remains heavily concentrated around the urban areas where most buyers actually want to live.

We are therefore most cautious on two ends of the market: premium new condominiums bought with aggressive leverage and cheap regional properties bought on the assumption that low price means good value.

Well-located resale housing sits in a better position today. Buyers can inspect more alternatives, push harder on price and avoid much of the new-build premium.

So the claim is partly true. Japan has become a worse place to buy blindly, and some properties are plainly too expensive at current mortgage rates. But we would not call this a broadly bad time to buy.

For a patient buyer with cash reserves and a long horizon, today's softer resale market may actually offer better opportunities than the hotter market that came before it.

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Japan. If you’d like to learn more about us, you can check our presentation page.