Has Tokyo property finally peaked?

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Why are people suddenly asking whether Tokyo property has peaked?

Tokyo property looks much closer to a turning point today because buyers have finally started pushing back after years of almost uninterrupted price increases.

The clearest change is in resale condominiums. Tokyo Kantei's standardised price for a 70-square-metre apartment in the 23 wards fell 0.8% in June and another 0.1% in July, taking the average to ¥127.24 million. June's fall ended 25 consecutive months of increases.

The centre weakened earlier. Tokyo Kantei recorded three consecutive monthly declines in central Tokyo by July, while the number of homes for sale increased. Price reductions have also become much more common. In June, more than half of the central-Tokyo properties tracked by Tokyo Kantei had undergone an asking-price revision.

At Home tells a slightly different story, which is useful. Its July resale index still put the 23 wards at a record high, but the monthly increase had shrunk to just 0.2%. So two major datasets disagree on whether prices have technically started falling, yet they agree on the more important point: the extraordinary upward momentum has faded.

The luxury market adds another warning. Mitsui Fudosan Realty's latest index for eight premium Tokyo condominium districts dropped from 306.1 to 275.6 in one quarter, while transaction volume fell for a fourth consecutive quarter.

For the first time in a while, there is a broad cluster of evidence that Tokyo buyers are resisting prices rather than simply accepting the next increase.

Tokyo property indicator	Earlier pattern	Latest reading	What changed
Tokyo Kantei 23-ward resale price	25 straight monthly increases	-0.8%, then -0.1%	First back-to-back weakness
At Home 23-ward resale asking price	Strong monthly gains	+0.2% MoM	Almost flat
Central Tokyo resale prices	Long rise	3 monthly declines	Weakness started in the centre
Premium condo price index	306.1	275.6	Sharp quarterly drop
Premium transactions	Already slowing	183 deals	Fourth quarterly decline

Have Tokyo condo prices actually stopped rising?

Tokyo condo prices have not stopped rising everywhere at once, and Tokyo has not yet entered a clear citywide decline.

The latest datasets are pulling in different directions.

Tokyo Kantei's 70-square-metre measure for the 23 wards has now fallen for two months. At Home, however, still recorded a new 23-ward resale asking-price record in July. East Japan REINS data also show that contracted resale prices per square metre remain well above last year's level.

The broader Tokyo metropolitan market is still moving up too. Tokyo Kantei's Greater Tokyo 70-square-metre resale price increased 1.2% in July, following a 1.3% rise in June. Weakness is concentrated much more heavily in the expensive centre.

It looks like a market beginning to separate by location and price rather than one rolling over together.

We would take a broad peak much more seriously once contracted resale prices, rather than selected asking-price measures, start falling across several Tokyo areas for more than a few months.

Does Tokyo's ¥265 million average new-condo price mean the boom is still accelerating?

No. Tokyo's ¥265.2 million average new-condo price is genuine, but that spectacular number makes the current market look much hotter than it really is.

The Real Estate Economic Institute reported that new condominiums launched in the 23 wards in July averaged ¥265.2 million, almost double the level one year earlier and the highest monthly figure ever recorded.

A few very expensive projects had an enormous influence. High-end properties launched in Minato averaged around ¥500 million, while a large Kita Ward development averaged roughly ¥150 million. Because the month's supply was small, these projects dragged the entire 23-ward average upward.

The first-half figure gives us a cleaner view. Across six months, new condos in the 23 wards averaged ¥142.49 million, up 9.1% year on year.

Nine percent annual growth is still huge for housing. It just tells a very different story from 96%.

There is also a selection effect that has become stronger as construction costs rise. Developers increasingly build projects in expensive locations or target wealthy buyers because cheaper developments are harder to make profitable. The "average Tokyo new condo" is therefore becoming a more luxurious product over time.

Today's record new-build prices show that scarce prime Tokyo property can still command extraordinary prices. They do not show that the typical apartment suddenly doubled in value.

New-condo measure	Average price	YoY change	How we read it
Tokyo 23 wards, first half	¥142.49m	+9.1%	Best broad new-build measure
Tokyo 23 wards, July	¥265.20m	+96.0%	Strongly affected by project mix
Greater Tokyo, first half	¥101.35m	+13.1%	Still very strong
Greater Tokyo, July	¥164.93m	+63.7%	Same luxury-project distortion
Tokyo 23 wards, full 2025	¥136.1m	+21.8%	Shows how large the preceding boom was

Are Tokyo sellers finally asking for more than buyers will pay?

Yes. Tokyo sellers can still ask record prices, but buyers are becoming much more selective about which homes deserve them.

One useful clue comes from the increasing number of price revisions recorded by Tokyo Kantei. In central Tokyo, the share of listings whose prices had been revised reached more than half in June after rising steadily during the spring.

That behaviour is more revealing than one small fall in an average index. Sellers usually test ambitious prices first. When enough homes sit unsold, asking prices start getting edited.

Inventory is moving the same way. Greater Tokyo had 47,151 resale condominiums available in July, according to data derived from East Japan REINS, 5.5% more than one year earlier. At the same time, resale contracts across Greater Tokyo fell 8.6% year on year to 3,638.

More homes available and fewer transactions create a different bargaining environment from the one sellers enjoyed during the strongest part of the boom.

Tokyo has not reached forced-selling territory. Owners can often wait, and many have little reason to slash prices quickly. But the days when an ambitious listing could rely on another wave of buyers appear to be ending, especially at the expensive end.

Has central Tokyo already peaked?

Prime central Tokyo looks like the part of the market most likely to have passed a short-term peak.

Mitsui Fudosan Realty's latest premium-condominium report covers areas including Roppongi, Akasaka, Toranomon, Azabu, Shirokane, Aoyama, Shibuya, Hiroo, Daikanyama, Ebisu, Bancho and Ginza.

Its transaction-price index fell 30.5 points in one quarter, from 306.1 to 275.6.

A single quarterly price move in a thin luxury market can be noisy. The transaction count is harder to dismiss. Only 183 deals were recorded, down from 193 in the previous quarter, marking a fourth consecutive quarterly decline.

That is close to a year of weakening liquidity.

Prime Tokyo can still produce ¥300 million, ¥500 million and even more expensive sales. There are enough wealthy domestic and overseas buyers for exceptional buildings to clear at exceptional prices.

The real question is how deep that buyer pool remains once prices move beyond the most desirable properties. Four consecutive quarters of shrinking transactions suggest it is getting shallower.

For now, we are more comfortable saying that central Tokyo's buying frenzy has peaked than saying its prices have permanently peaked.

Are higher mortgage rates finally hurting Tokyo property?

Yes. Higher Japanese mortgage rates are starting to bite precisely when Tokyo buyers can least afford another increase in housing costs.

For years, Tokyo property prices could rise while borrowing remained extraordinarily cheap. That cushion has shrunk.

Major lenders now advertise variable mortgage rates around or above 1% for many borrowers, depending on the bank and loan conditions. Long fixed-rate mortgages have moved much higher.

The arithmetic changes quickly on a large Tokyo loan. A ¥100 million mortgage over 35 years costs roughly ¥282,000 a month at 1%. At 1.5%, it rises to around ¥306,000. At 2%, the payment is about ¥331,000. At 4%, it reaches roughly ¥443,000.

Going from 1% to 2% therefore adds close to ¥50,000 a month before the buyer has spent anything more on the property itself.

That becomes particularly uncomfortable after new-condo prices in the 23 wards rose 21.8% in 2025 and another 9.1% year on year in the first half of this year.

Rates would have been much easier to absorb when a typical new Tokyo apartment cost ¥60 million or ¥70 million. At ¥140 million, every extra fraction of a percentage point becomes real money.

¥100m mortgage over 35 years	Approx. monthly payment	Extra vs 1%
1.0%	¥282k	-
1.5%	¥306k	+¥24k
2.0%	¥331k	+¥49k
3.0%	¥385k	+¥103k
4.0%	¥443k	+¥161k

Can normal Tokyo households still afford new condos?

For much of central Tokyo, normal salaried households have effectively been priced out of new condominiums.

The scale of the gap becomes obvious when we compare prices with income.

New condos across the 23 wards averaged ¥142.49 million in the first half of the year. Even a household earning ¥10 million annually would be looking at a purchase worth more than 14 times its gross income before taxes and living costs.

Mitsubishi UFJ Research and Consulting has estimated that the income required to afford the average new 23-ward condominium has moved toward roughly ¥20 million under fixed-rate financing assumptions. Even using cheaper variable-rate borrowing, the required household income was around ¥18 million in its calculations.

Those are high-income households by Japanese standards.

The problem is even clearer through rent. Tokyo Kantei calculated that a standardised 70-square-metre new Greater Tokyo condominium represented 30.46 years of comparable rent in 2025. Around Shirokane-Takanawa, the multiple reached 47.83 years.

A buyer paying almost 48 years of gross rent for an apartment needs to believe strongly in future scarcity, capital appreciation or the unique value of owning that exact property.

Affordability is one of the strongest reasons to expect slower Tokyo price growth from here. There simply are not enough households whose incomes can keep matching double-digit annual price increases forever.

Are Tokyo rents rising fast enough to support property prices?

Tokyo rents are still climbing quickly, which gives property prices real support, but rents have not kept pace with the most aggressive price increases.

Tokyo Kantei's latest measure put 23-ward condominium rents at ¥5,157 per square metre in July, up 0.8% in one month and at the highest level seen over the previous year.

The rental rise is broad enough to matter. At Home has repeatedly reported record or near-record asking rents across single, couple and family-sized apartments in the 23 wards. Savills also measured annual rental growth across the wards earlier this year, with stronger increases in central areas.

That is healthy for owners. A market where rents are rising tends to have a much better floor than one where both prices and rents are falling.

The gap between the two is the problem.

A 3% to 5% rise in rent cannot fully justify a condominium whose purchase price rises 10%, 20% or more in the same period. Buyers end up accepting lower rental yields.

That is already common in prime Tokyo, where gross yields of roughly 2.5% to 3.5% are hardly unusual. Once management charges, repairs, taxes and vacancy are deducted, the income return becomes thin.

Rising rents currently help Tokyo avoid a harder correction. They offer much less support for another period of runaway price inflation.

Is Tokyo's housing shortage stopping prices from falling?

Yes. Tokyo's severe shortage of new condominiums is probably the single strongest reason a demand slowdown has not yet produced a large price correction.

Greater Tokyo developers launched only 21,962 new condominiums in 2025, according to the Real Estate Economic Institute. That was the lowest total since the series began in 1973.

For perspective, more than 95,000 units were supplied in 2000. Annual supply has fallen to roughly 23% of that level.

The shortage continues today. Only 7,989 units reached the Greater Tokyo market during the first half of the year, down another 0.8% and the second-lowest first-half total on record.

Developers face expensive land, higher labour costs and more expensive construction materials. Those costs encourage them to build fewer units, target wealthy buyers and concentrate on projects where higher selling prices can still produce acceptable margins.

There are signs that demand is struggling with those prices. The first-month contract rate for new Greater Tokyo condominiums averaged 64.8% in the first half, below the 70% level generally considered healthy and below that benchmark for a third consecutive first half.

Supply is extraordinarily tight while buyer resistance is becoming clearer. That combination can produce low transaction volumes and flat prices for a long time before producing a crash.

Greater Tokyo new-condo market	Latest relevant figure	Context
2025 supply	21,962 units	Lowest since 1973
Peak annual supply in 2000	95,635 units	Current market is ~23% as large
First-half current supply	7,989 units	Second-lowest on record
First-half change	-0.8% YoY	Supply still shrinking
First-month contract rate	64.8%	Below 70% for third straight first half
Current-year forecast	~23,000 units	Only a small recovery

Are Tokyo land prices still rising underneath the condo slowdown?

Yes. Tokyo land prices are still rising fast enough that a broad property peak is very difficult to declare today.

The Tokyo Metropolitan Government's latest official land-price assessment showed residential land in the 23 wards rising 9.0% year on year, accelerating from 7.9%.

Every one of the 23 wards recorded an increase for a fifth consecutive year.

Minato led the residential market with a 16.6% rise, followed by Taito at 14.2% and Shinagawa at 13.9%. Even the weakest increases were comfortably positive: Katsushika rose 5.6%, Edogawa 5.7% and Nerima 6.2%.

Commercial land moved even faster. Prices across the 23 wards increased 13.8%, compared with 11.8% the previous year. Taito reached 19.1%, Bunkyo 17.8%, while Nakano and Suginami both rose 17.5%.

The six-month breakdown is especially useful. Official common-site data showed residential land inflation in the wards accelerating from 4.3% in the first half of the preceding annual period to 4.7% in the second half. Commercial land accelerated from 6.4% to 7.0%.

The land market was still gaining speed at the latest measurement point.

Asking prices for expensive apartments can wobble while developers continue paying more for the ground beneath them. If official land growth eventually drops toward zero, the case for a genuine Tokyo-wide peak becomes much stronger.

Official Tokyo land-price growth	Latest annual change	Previous annual change
23 wards residential	+9.0%	+7.9%
Minato residential	+16.6%	+12.7%
Taito residential	+14.2%	+10.2%
Shinagawa residential	+13.9%	+11.9%
23 wards commercial	+13.8%	+11.8%
Taito commercial	+19.1%	+14.8%

Is Tokyo still adding enough people to keep housing demand strong?

Yes. Tokyo is still gaining residents today, and the latest official population figures make the national story of a shrinking Japan a poor shortcut for understanding Tokyo housing.

The Tokyo Metropolitan Government's newest estimate puts the population at about 14.30 million.

That was around 61,000 more people than one year earlier.

The 23 wards alone were just short of 10 million residents, with roughly 9.997 million in the latest estimate.

There is also a useful longer-term detail in the resident-register statistics. Tokyo's population increased by about 75,000 over the year to January, and roughly 62,000 of that increase came from foreign residents.

International migration is therefore playing a major role in Tokyo's recent growth, while the city continues attracting younger people from elsewhere in Japan for work and education.

An extra 60,000 or 70,000 people cannot explain every increase in condominium prices, but it does create genuine housing demand in a market where new construction is extremely limited.

Tokyo would become much more vulnerable if population growth disappeared at the same time as mortgage costs rose and inventory accumulated. We have not reached that combination.

Are foreign buyers and the weak yen still propping up Tokyo property?

Foreign buyers are helping Tokyo's luxury market, while their role in the overall price boom is easy to exaggerate.

Japan's land ministry found that purchasers with overseas addresses accounted for roughly 3.5% of new condominium purchases in the 23 wards during the first half of 2025.

The share reached about 7.5% in the six central wards and was much higher in a few individual districts. That is enough to influence luxury towers where the number of available units is small.

It cannot explain a city of almost 10 million ward residents by itself.

Currency has made those buyers more powerful. When the yen is weak, an apartment whose price has exploded in yen can still look comparatively reasonable to someone earning or holding assets in dollars, Singapore dollars or another strong currency.

Take a ¥200 million apartment. At ¥100 to the dollar it costs $2 million. At ¥150, the same yen price converts to about $1.33 million.

That currency discount helped Tokyo absorb prices that would have looked much harder to justify to a domestic buyer.

It also creates a risk from here. A stronger yen can make Tokyo substantially more expensive for overseas purchasers even before the seller raises the asking price.

Foreign demand should therefore remain one source of support for prime property, especially while Japan looks inexpensive relative to cities such as Singapore, Hong Kong or New York. We would not rely on it to rescue every overpriced Tokyo apartment if domestic demand weakens.

Is the slowdown spreading from central Tokyo to the rest of the city?

Some weakness is spreading outward now, although cheaper parts of Tokyo remain much healthier than the premium core.

Tokyo Kantei's July report specifically noted that the adjustment first seen in the city centre was beginning to appear in neighbouring wards as the number of resale listings increased.

Genuine property downturns often spread in stages. The most expensive and speculative areas weaken first, then softer pricing appears farther out if buyers continue retreating.

We are not seeing that across all of Tokyo yet.

Official land prices in the Tama area still rose 3.9%, faster than the previous year's 3.4%. Kokubunji increased 7.2%, Kunitachi 7.1% and Tachikawa 7.0%.

Detached housing gives us another check. Tokyo Kantei's July data showed both new and existing house prices in the 23 wards rising even while resale condominium prices in the centre were softening.

Affordability appears to be redirecting some demand. Buyers priced out of central condos can move farther out, buy an older unit or choose a house.

A broader Tokyo peak becomes much easier to argue once those escape routes stop appreciating too.

Could Tokyo property fall without ever having a dramatic crash?

Yes. A long stretch of flat prices fits today's Tokyo property market better than a sudden crash.

Tokyo currently has several brakes on demand: extreme affordability pressure, higher mortgage rates, weakening luxury transactions and more resale inventory.

At the same time, rising rents, higher land values, population growth and historically low new-condo supply are stopping those brakes from turning into a severe oversupply problem.

The result could be a frustrating market rather than an exciting one.

Sellers refuse to accept large discounts because they have little pressure to sell. Buyers refuse to chase the previous year's prices because financing and affordability have worsened. Transactions drop. Nominal prices move sideways or decline gradually while incomes and rents slowly catch up.

Inflation can do part of the adjustment too. If an apartment remains at ¥100 million for five years while wages, rents and general prices rise, its real value has fallen without the owner ever seeing a dramatic nominal price cut.

Stagnation is a much more credible downside scenario currently than the kind of sudden collapse associated with an oversupplied housing bubble.

What would convince us that Tokyo property has really peaked?

We would call a genuine Tokyo property peak once today's isolated weaknesses spread into actual transaction prices, land values and rents.

The first thing we want to see is persistence in resale prices. Tokyo Kantei has now recorded two monthly declines in the 23 wards, while central Tokyo has fallen for three. If contracted prices begin showing the same pattern for six months or more, the evidence becomes much stronger.

Inventory is the next piece. Greater Tokyo resale stock is already up 5.5% year on year while July transactions fell 8.6%. Another sustained increase in stock alongside falling deals would put more pressure on sellers.

New developments also need watching. First-month contract rates are already below the traditional 70% benchmark. Actual developer discounting, widespread incentives or cancelled launches would show that high construction costs can no longer simply be passed to buyers.

Land would be the strongest confirmation. Residential land across the 23 wards is currently rising 9.0%, so we are still a long way from that point.

Rents matter too. Tokyo Kantei's 23-ward condominium rent has recently reached ¥5,157 per square metre and is still rising. If rents flatten while resale inventory grows and sales prices fall, investors lose one of their best reasons to buy the dip.

As seen above, Tokyo's population is also still increasing. A reversal there would remove another layer of demand.

Several of those things need to happen together before we would describe the entire Tokyo property market as having peaked.

What to watch	Situation now	What would confirm a broader peak
23-ward resale asking prices	First signs of decline	Sustained multi-month falls
Contracted resale prices	Still high YoY	Broad YoY decline
Resale inventory	Rising	Keeps rising while transactions fall
Premium transactions	Falling for 4 quarters	Weakness continues and spreads
New-condo contract rate	64.8% in H1	Persistent weakness plus discounting
Residential land	+9.0%	Sharp slowdown or decline
Rents	Still rising	Broad flattening or decline
Tokyo population	Still growing	Sustained population decline

Has Tokyo property finally peaked?

Tokyo property has probably reached the end of its easy boom, but we would still call a citywide peak premature.

The strongest warning is coming from resale condominiums in central Tokyo. Tokyo Kantei has now recorded two consecutive monthly declines across the 23 wards and three in the centre. Premium transaction volumes have fallen for four straight quarters. Resale inventory is rising. Mortgage costs are higher. Buyers are becoming much less forgiving of ambitious asking prices.

That is a real change.

Yet the broader foundations have not rolled over. Official residential land values in the 23 wards are rising 9%. Tokyo condominium rents are still hitting new highs. The city's population is still growing by more than 60,000 people a year in the latest estimate. Greater Tokyo produced only 7,989 new condominiums in the first half of the year after recording its lowest full-year supply since 1973.

Those forces make a broad fall difficult even as the expensive end cools.

Our read today is that prime Tokyo condos are already flirting with a cyclical peak, particularly properties whose prices ran far ahead of rents and local incomes. The wider 23-ward market is entering a slower and much more selective phase. Cheaper districts, houses and well-located properties with genuine end-user demand still have room to behave differently.

The next chapter of Tokyo property should look messier than the last one. Some sellers will cut. Some neighbourhoods will keep rising. Record-breaking new developments will continue to distort averages. Transaction volumes may weaken long before the official price statistics show a major correction.

For Tokyo as a whole, the peak has not been confirmed.

For the most expensive corner of the condominium market, it may already be behind us.

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 Tokyo. If you’d like to learn more about us, you can check our presentation page.