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Everything you need to know before buying real estate is included in our Japan Property Pack
Are you considering investing in Japan's property market by 2025? Curious about the emerging trends that could impact your decision? Want to know which areas are set to boom and which might decline?
We will lay down recent insights, providing a clear picture of the future landscape. Ici no guesswork, we rely only on solid data.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Japan Property Pack
1) Japan's residential property prices will stabilize as the market adapts to post-pandemic conditions
In Japan, residential property prices are showing signs of stabilizing as the market adjusts to post-pandemic conditions.
In 2023, the nationwide residential property price index increased by only 2.4% compared to the previous year. This is a noticeable slowdown from the 4.8% rise seen earlier, suggesting that the rapid price hikes are easing. This shift is particularly evident in urban areas like Tokyo, where the market dynamics are changing.
In Tokyo, the demand for housing is cooling off, with sales of existing condo units dropping by 9.8% and detached houses by 12.2%. This decline in demand is mirrored by a decrease in the number of new condominium units entering the market. Such a balance between supply and demand is essential for keeping prices steady, offering potential buyers a more predictable market environment.
Government initiatives are also influencing the market. The Ministry of Land, Infrastructure, Transport and Tourism is tackling the issue of abandoned homes by reintroducing them into the market. This strategy not only addresses the surplus of unused properties but also helps manage the overall housing supply more effectively, contributing to price stabilization.
For those considering buying property in Japan, these trends suggest a more stable market environment. The easing of price hikes and the government's proactive measures are creating a more balanced market, which could be beneficial for buyers looking for long-term investments.
Sources: Global Property Guide, E-Housing Japan
2) Foreign buyers will flock to Japan's residential market as the yen's depreciation makes properties cheaper
Foreign buyers are increasingly eyeing Japan's real estate market due to the yen's depreciation, making properties more affordable.
In 2023, foreign investment in Japan's real estate hit $10.2 billion, a noticeable jump from the previous year. The first half of 2023 alone saw a 45% increase in foreign investment, largely because of the weak yen. This trend is evident as more international real estate agencies report a surge in inquiries, with property owners eager to sell to foreign investors.
The yen's weakness has made Japanese properties cheaper, drawing in more foreign buyers. Imagine a property valued at 100 million yen; with a favorable exchange rate of 130 yen to a dollar instead of 110, the cost in dollars drops significantly. This currency advantage is often highlighted in media, painting Japan as a hot spot for real estate investment.
Foreign investors are not just looking at the numbers; they see Japan as a stable and culturally rich environment. The yen's depreciation offers them a chance to own a piece of this vibrant country at a discounted rate. This opportunity is too good to pass up for many, especially those looking to diversify their investment portfolios.
Japan's real estate market is also appealing due to its robust infrastructure and high quality of life. Cities like Tokyo and Osaka offer a blend of modernity and tradition, making them attractive to international buyers. The weak yen simply adds another layer of appeal, making these cities more accessible financially.
As the yen continues to stay weak, the trend of increased foreign interest is expected to persist. This ongoing interest is a testament to Japan's allure as a real estate destination, with the currency advantage acting as a catalyst for investment.
Sources: Wagaya Japan, E-Housing
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3) Rental demand in tourist areas like Kyoto will surge with tourism rebound boosting rental yields
Tourism in places like Kyoto is making a strong comeback.
In March 2024, Japan saw over 3 million international visitors in just one month, a huge leap from the previous year. This surge is a clear sign that tourism is bouncing back, especially in popular spots like Kyoto. With more tourists flocking in, the demand for rental properties is on the rise.
Kyoto's short-term rental market is booming, with a median occupancy rate of 80%. Many properties are booked throughout the year, showing that tourists prefer these rentals over traditional hotels. The average daily rate for these rentals is ¥18,504, which means hosts are seeing substantial annual revenue.
The Japan National Tourism Organization expects tourism to surpass pre-pandemic levels by 2025. This growth will likely increase the demand for rental properties in tourist-heavy areas like Kyoto, boosting rental yields. As tourism rebounds, investing in rental properties here could be a smart move.
With the ongoing recovery, Kyoto remains a top choice for tourists, and this trend is expected to continue. The city's rich culture and history make it a magnet for visitors, ensuring a steady stream of potential renters for property owners.
For those considering buying property in Kyoto, the thriving rental market offers promising returns. As tourism continues to grow, so does the opportunity for rental income, making it an attractive investment.
Sources: Japan Times, Airbtics, Nippon.com
4) Foreign investors target Tokyo and Osaka properties for stable returns and long-term growth
Foreign investors are eyeing properties in Tokyo and Osaka for their potential in stable returns and long-term growth.
In 2023, Tokyo's property prices hit a record high, and the buzz is that 2024 will see even more growth thanks to urban development and infrastructure upgrades. This makes Tokyo and Osaka hot spots for those looking to invest in real estate with a promising future.
Rental yields in these cities are quite appealing, ranging from 3.5% to 8%, which is on par with other major global cities. This kind of stability is a magnet for foreign investors who want a steady income. Japan's economy, while not booming, is resilient enough to provide a stable backdrop for real estate investments.
In 2023, foreign direct investment in Japan's real estate market saw a notable uptick, with Singapore leading the way. This surge is fueled by government policies that make it easier for foreign investors to enter the market, like relaxed restrictions and tax incentives.
Investor confidence is also getting a boost from interest in regions like Hong Kong, Singapore, Korea, and Taiwan. The Japanese government is actively working to attract foreign investment, and with tourism expected to bounce back to pre-pandemic levels by 2025, there's a lot of optimism for growth in both residential and commercial properties.
All these factors make Tokyo and Osaka particularly attractive for foreign investors looking for stable returns and long-term growth. Government efforts and market conditions are aligning to create a golden opportunity in Japan's real estate market.
Sources: Housing Japan, Savills, E-Housing
5) Regional cities will experience higher rental yields as they attract remote workers and young families
Regional cities in Japan are becoming hotspots for remote workers and young families.
In 2024, places like Fukuoka and Sapporo saw impressive rental yields, with Fukuoka at 4.72% and Sapporo even higher at 5.56%. This trend highlights a growing interest in these areas for rental properties. The appeal is partly due to the increasing popularity of remote work among Japanese employees, who are looking for more space and lower living costs outside the bustling city centers.
A survey by MailMate showed that 61.2% of Japanese workers prefer jobs with remote work options. This preference is pushing many to consider regional cities, where they can enjoy a more relaxed lifestyle. Young families are also drawn to these areas, seeking a better quality of life and more room for their children to grow.
There's anecdotal evidence of rising school enrollments in regional areas, suggesting that more families are making the move. The Japanese government is also playing a role by investing in regional revitalization projects, which include infrastructure improvements that make these cities even more attractive.
With these developments, regional cities are not just becoming more livable but also more lucrative for property investors. The combination of higher rental yields and a steady influx of new residents makes these areas a promising choice for those looking to invest in real estate.
Sources: Global Property Guide, MailMate, Global Property Guide
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6) Inheritance tax law changes will affect property transfers and alter market dynamics
In Japan, changes in inheritance tax laws are shaking up the property market.
In 2023 and 2024, Japan experienced a surge in inheritance tax revenue, hitting 2.97 trillion yen in 2022. This is almost double what it was a decade ago, showing that more people are getting taxed on what they inherit. This shift is changing how property assets are managed and transferred.
One major change is the extension of the period for adding back gifted property to inheritance, now from three to seven years. This means more properties are included in the taxable estate, leading to a rise in inheritance tax filings. People might rush to sell or transfer properties before these changes take effect to cut down on their tax bills.
Families are feeling the pinch, sometimes needing to sell properties to cover the increased tax liabilities due to this extended inclusion period. There's also been a noticeable uptick in financial planning services as folks try to figure out these new rules. This shows a growing need for strategic planning to handle tax burdens smartly.
These changes are not just numbers on paper; they are affecting real lives. People are scrambling to adjust their plans, and the demand for financial advice is on the rise. The market is buzzing with activity as everyone tries to stay ahead of the game.
Sources: Ichino Tax, Statista, Deloitte
7) Demand for smaller efficient living spaces will rise in urban areas as single-person households grow
In Japan, single-person households have surged, making up 34% of all households in 2023.
With 92.04% of the population living in urban areas, cities like Tokyo are bustling and space is scarce. This urban density is pushing the demand for homes that maximize every square inch.
People are increasingly drawn to smaller, more budget-friendly housing due to the high cost of city living. This shift is evident in the rise of micro-apartments and capsule hotels, which offer smart, compact living solutions.
These tiny living spaces are not just a trend but a necessity, as urban areas adapt to the growing number of single-person households. The need for efficient use of space is more critical than ever.
In bustling cities, the demand for compact living is reshaping the housing market. Developers are responding with innovative designs that cater to this new urban lifestyle.
As more people choose to live alone, the preference for smaller, efficient homes is expected to grow, transforming urban landscapes.
Sources: Nippon, Statista, Design Build
8) Japan's aging population will drive demand for senior-friendly housing and retirement communities
Japan's aging population is a major driver for the growing demand for senior-friendly housing and retirement communities.
In 2024, 36.25 million people in Japan were aged 65 and older, making up 29.3% of the total population. This is the highest proportion of elderly people in any country worldwide. With people living longer, the need for suitable living arrangements is becoming more urgent. Japan's high life expectancy, especially among women, has led to a notable increase in centenarians. In September 2024, there were 95,119 centenarians, up from the previous year, indicating a growing need for age-appropriate housing.
The Japanese government is aware of this trend and has been actively promoting the development of senior housing. Since 2013, they have introduced initiatives to encourage investment in senior housing and care facilities through incentives and subsidies. The government is also pushing for compact city development, which aims to provide older residents with easy access to essential services like retail and healthcare.
Another factor driving demand is the increasing number of older adults living alone. Over the past decade, the number of seniors living alone has risen by more than 60%, with 20% of those aged 65 and over living alone in 2020. This trend highlights the need for housing solutions that offer community and support for isolated seniors.
Sources: Kyodo News, DLA Piper, AARP International, MS Research Hub, Nippon.com
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9) Remote work will boost demand for affordable suburban properties around Tokyo as people seek more space
The shift to remote work is reshaping where people want to live, especially in bustling cities like Tokyo.
In 2023, a survey by Nomura Research Institute found that 15.3% of Tokyo workers plan to move to the suburbs within a year, and 28.4% aim to do so within five years. This trend is driven by the search for more space and affordable housing, which are easier to find in suburban areas than in the city center.
Suburban areas are becoming increasingly attractive due to lower housing costs. While property prices in central Tokyo keep climbing, the suburbs offer a more budget-friendly option. This affordability, along with the desire for larger living spaces, is pulling more people towards these areas.
The remote work trend, which took off during the COVID-19 pandemic, is still going strong. Many Tokyo companies have embraced flexible work setups, including a 4-day work week starting in 2025. This flexibility makes living further from work more practical and appealing, encouraging suburban living.
With remote work here to stay, people are rethinking their living arrangements. The suburbs offer a chance to escape the high costs and cramped spaces of city life, providing a more comfortable and affordable lifestyle.
As more people seek out suburban homes, the demand for properties in these areas is expected to rise. This shift is not just about affordability but also about finding a better quality of life, with more room to breathe and grow.
Sources: Mainichi, E-Housing, Housing Japan, E-Housing
10) New tax incentives will boost the development of eco-friendly homes in Japan
In Japan, new tax incentives are boosting the appeal of energy-efficient homes.
Since April 2023, the government requires homes to meet energy-saving standards to qualify for the Flat 35 home loan program. This move is designed to cut down on greenhouse gas emissions, making these homes more attractive to buyers. By 2024, these standards became crucial for mortgage tax reductions, pushing developers to focus on eco-friendly properties.
By April 2025, compliance with these energy standards will be mandatory, showing the government's dedication to energy efficiency in housing. This push is backed by increased funding and grants for green building projects, making it easier for developers to invest in sustainable construction.
The government is also promoting smart technologies with subsidies and incentives, especially for energy-efficient homes. This has led to a rise in Net Zero Energy Houses (ZEH), with about 7,600 properties registered by November 2020. The demand for connected and automated living spaces is growing, driven by tech advancements and consumer interest in sustainability.
These initiatives are not just about cutting emissions; they’re about creating homes that are smarter and more efficient. The focus on sustainability is reshaping the housing market, making eco-friendly homes a smart choice for buyers.
Sources: Real Estate Japan, RE/MAX Apex, E-Housing Japan
11) Falling birth rates will flood the market with family homes lowering their value
Japan's birth rates have hit a historic low, with the total fertility rate dropping to 1.20 in 2023.
This decline means fewer families are looking for larger homes, and it's not just about the numbers. In 2023, the number of births fell to 727,277, a significant drop from the previous year. This shift is creating a ripple effect in the housing market, especially in areas where families traditionally settled.
Adding to the situation, Japan is seeing a rise in empty homes. About nine million homes were unoccupied in 2023, with a vacancy rate of 13.8 percent. Compare this to 1963, when the vacancy rate was just 2.5 percent, and you can see how the landscape is changing.
Looking ahead, the population is expected to shrink further, potentially reaching 87 million by 2070. This means even less demand for family-sized homes, especially in regions where the population is dwindling. Real estate experts are already predicting an oversupply, which could lead to a drop in property values.
For potential buyers, this could mean more options and better prices, but it's essential to consider location. Areas with declining populations might see more significant drops in home values, making them less attractive for long-term investment.
Understanding these trends is crucial for anyone considering buying property in Japan. The market is shifting, and the surplus of family-sized homes is a key factor to watch.
Sources: Kyodo News, Statista, Visual Capitalist
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12) Interest in traditional Japanese homes will plummet as modern living favors convenience and technology
In Japan, new home construction has been on the decline recently.
With over 90% of Japan's population now living in cities, there's a clear trend towards urban living. This urbanization means that more people are opting for modern apartments and condos, leaving traditional homes, often found in rural areas, less desirable.
The smart home market in Japan is thriving, with significant growth expected from 2023 to 2029. This boom is fueled by the rise of IoT devices, which offer convenience, energy efficiency, and enhanced security. As these technologies become more popular, traditional homes, which lack these modern features, are losing their appeal.
Consumer preferences are shifting, especially among younger generations who prefer compact, efficient living spaces in urban areas. This change is evident in the real estate market, where there's a higher demand and rising prices for modern living spaces. Government incentives for smart technologies are also pushing this trend forward.
In 2023, there was a 7.0% decrease in newly constructed housing starts compared to the previous year, and this trend continued into 2024. The drop was particularly noticeable in custom-made single-family homes, which are often traditional in style.
As people embrace modern living, traditional Japanese homes are seeing a decline in interest. The convenience and technology offered by modern homes are becoming more attractive to potential buyers.
Sources: Patience Realty, Wikipedia, Markets and Markets, Patience Realty, Statista
13) Fukuoka will attract young buyers with its vibrant culture and lower living costs than Tokyo
Fukuoka is quickly becoming a hotspot for younger buyers due to its vibrant cultural scene and lower cost of living compared to Tokyo.
Imagine living in a city where your monthly expenses are significantly lower. In Fukuoka, the cost of living is about $1,162 for one person, while in Tokyo, it's around $1,641. This means you can enjoy a more affordable lifestyle, which is a huge draw for young people just starting out. The savings can be spent on exploring the city or investing in personal growth.
Fukuoka isn't just about saving money; it's also about living life to the fullest. The city is famous for its lively festivals, like the Hakata Gion Yamakasa and the Hakata Dontaku Port Festival. These events create an exciting atmosphere that young people love. Plus, Fukuoka is gaining a reputation as a startup hub, with initiatives like the Start-up Café supporting entrepreneurs and fostering a dynamic business environment.
Social media is buzzing with Fukuoka's appeal. Digital platforms are showcasing the city's lifestyle and cultural attractions, making it more visible and attractive to young people. This online presence is crucial in drawing attention to what Fukuoka has to offer.
Government initiatives are also playing a role in promoting Fukuoka as a livable city for young professionals. These efforts are encouraging more young people to consider moving there, adding to the city's growing appeal. The combination of affordability, culture, and opportunity makes Fukuoka a compelling choice.
Sources: Fukuoka vs Tokyo Cost of Living Comparison, Fukuoka City Events Calendar, Fukuoka City Startup Hub
14) Luxury penthouses in cities will keep drawing wealthy buyers seeking exclusivity and status
Luxury penthouses in cities like Tokyo and Osaka are hot commodities among the wealthy.
In 2023, central Tokyo apartments hit record prices, showing just how much people want these exclusive homes. This trend didn't slow down in 2024, with Grand Green Osaka's top room priced at 2.5 billion yen, the highest in the Kansai region.
Japan boasts a large number of wealthy individuals, and even though the ultra-rich slightly decreased from 2022 to 2027, there's still a strong market for luxury real estate. The demand for high-end properties in Tokyo and Osaka highlights the desire for exclusive living spaces.
Media and social media are buzzing about urban luxury living, often showcasing the glamorous lifestyles tied to penthouses. Some units even feature innovative designs like vehicle galleries, appealing to those seeking something unique.
The scarcity of high-end properties in these bustling cities only adds to their allure, pushing prices and demand even higher. This limited availability makes them even more desirable for affluent buyers.
Sources: Patience Realty, Kyodo News, RP Realty Plus
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15) Kobe's property interest will surge due to its international community and scenic coastal location
Kobe is seeing a steady rise in property interest for several compelling reasons.
In 2023, property prices in Kobe have surged, with existing condominiums increasing by 9% and new condominiums jumping by 42.5%. This growth outpaces other major Japanese cities, highlighting a strong demand for Kobe's real estate. A key driver of this demand is the city's vibrant international community, which includes numerous international schools and businesses that attract expatriate families and professionals.
Kobe's scenic coastal location adds to its appeal, making it a desirable place to live. The city is often ranked highly in surveys among expatriates, who appreciate its high quality of life and stunning surroundings. This positive perception is bolstered by media coverage that showcases Kobe's unique lifestyle and amenities.
For those considering a move, Kobe offers a blend of urban convenience and natural beauty. The city's international community is not just a draw for expatriates but also a testament to its global appeal. This diverse environment fosters a welcoming atmosphere, making it easier for newcomers to settle in and feel at home.
Moreover, Kobe's strategic location along the coast provides residents with easy access to both the mountains and the sea, offering a variety of recreational activities. This unique geographical setting is a significant factor in the city's growing popularity among property buyers.
As Kobe continues to attract interest, its property market is expected to remain robust, driven by its international community and picturesque setting.
Sources: Global Property Guide, Fitch Solutions, Akiyaz.io
16) Nagoya's prime location and industrial growth will boost its real estate market and draw more investors
Nagoya's real estate market is on the rise thanks to its prime location and booming industrial scene.
With a top-notch logistics and transportation network, including the ever-expanding Port of Nagoya, the city is a magnet for international trade. This makes it a hot spot for businesses and investors eager to tap into global markets.
Big names like Toyota, Honda, and Mitsubishi call Nagoya home, fueling demand for industrial spaces and warehouses. This automotive hub not only powers the local economy but also draws in investors keen on the bustling car industry.
Nagoya's industrial landscape isn't just about cars; it also thrives in aircraft and machine tools, which boosts commerce and service sectors. This diverse manufacturing base is a key driver for economic growth.
The local government is all in, rolling out initiatives to lure international businesses. By focusing on five priority industries and offering incentives, Nagoya becomes even more attractive to investors.
Multinational companies setting up shop in Nagoya signal a rise in foreign direct investment, giving the real estate market an extra boost.
Sources: Prologis, NPTC, JETRO
17) Sapporo will see a property boom as it becomes a tech startup and young professional hub
Sapporo is quickly becoming a magnet for tech startups and young professionals, driving a surge in property interest.
The city is buzzing with new investments in tech infrastructure, thanks to initiatives like Startup City Sapporo. These programs are providing essential resources, creating a supportive environment for new businesses to thrive. It's not just about tech; Sapporo's diverse industries, including agriculture, tourism, and biotechnology, offer a rich pool of resources for innovation.
In 2023, Sapporo made a remarkable leap, climbing 95 spots in the Global Startup Ecosystem Index. This growth is a testament to the city's dynamic atmosphere, which is attracting a wave of young professionals. Local universities are stepping up, offering specialized programs in fields like artificial intelligence, which is drawing tech talent to the city.
The influx of young professionals is reshaping Sapporo, making it a vibrant hub for innovation. The city's urban development is keeping pace, with new coworking spaces and modern amenities popping up to cater to this demographic. This shift is contributing to Sapporo's dynamic and innovative atmosphere.
For those considering a move, Sapporo offers a unique blend of opportunity and lifestyle. The city's tech sector is not just growing; it's thriving, making it an attractive destination for both startups and established companies. This growth is transforming Sapporo into a key player in Japan's real estate market.
Sources: StartupBlink, XYZ Lab, Old Houses Japan
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18) Hiroshima properties will attract interest due to the city's sustainable urban development investments
Hiroshima is turning heads with its push for sustainable urban development.
With the Japanese government backing these green initiatives, Hiroshima is set to receive a slice of a $75 billion investment aimed at boosting infrastructure in the Indo-Pacific region. This means more funds for projects that focus on sustainability and resilience, making the city a hot spot for future growth.
As Hiroshima gears up for major urban redevelopment, expect property values to climb. These projects are not just about new buildings; they include green spaces and energy-efficient designs that appeal to both locals and investors. In Tokyo, similar efforts have seen property prices rise by 5-6% annually, a trend that could soon be seen in Hiroshima.
Japanese consumers are increasingly eco-conscious, with over 60% willing to pay extra for green products. This shift is fueling the demand for smart, energy-efficient homes, a trend already popular in cities like Tokyo and Osaka. Hiroshima is poised to ride this wave, offering sustainable living options that meet this growing demand.
Hiroshima's green reputation is also drawing more tourists, which can boost the local economy and property market. The city's role in international sustainability talks, like the G7 Hiroshima Summit, is attracting global attention and investment. These collaborations bring in the expertise and resources needed to enhance Hiroshima's sustainable projects.
With all these developments, Hiroshima is becoming a magnet for both domestic and international investors looking for sustainable opportunities. The city's commitment to eco-friendly growth is not just a trend; it's a strategic move that promises long-term benefits.
Sources: CSIS, E-Housing, Kadence
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.