Since 2020, new condo prices in central Tokyo have climbed more than 30%. In the 23 wards (東京23区), the average new condo price crossed ¥100 million in 2023 for the first time on record. Used condo prices followed, with slower momentum. If you are a foreign buyer entering this market now, you are buying near a cyclical peak. That does not mean you should not buy. It means you should understand what drove the move, and what could reverse it.
This is the analysis we run for clients at RE : public before they sign anything.
What the data actually shows
Let's separate the noise from the signal.
According to the Real Estate Economic Institute (不動産経済研究所), the average new condo price in the Tokyo 23 wards was around ¥7,700万 in 2020. By 2023, it reached ¥1.14億. That is roughly a 48% rise in three years for new supply.
Used condo data from REINS (東日本不動産流通機構) tells a milder story:
- 2020 average used condo price (23 wards): around ¥5,800万
- 2024 average used condo price (23 wards): around ¥7,800–8,000万
- Approximate gain: 30–35% over four years
The gap matters. New condo averages are skewed by a small number of ultra-luminous projects — Azabudai Hills (麻布台ヒルズ), Mita Garden Hills (三田ガーデンヒルズ), and similar. The used market is a better reference for what the broader stock is doing.
Outside the 23 wards, the picture is softer. Suburban Tama (多摩) and parts of Chiba and Saitama rose, but more modestly — closer to 10–20%.
So the headline "+30%" is real, but it is concentrated. Central wards, large units, and new supply led. The rest followed at a distance.
Why prices rose: five forces, not one
The move was not driven by speculation alone. Five structural forces stacked at the same time.
1. Construction costs jumped
The Construction Cost Deflator published by the Ministry of Land, Infrastructure, Transport and Tourism (国土交通省) rose roughly 25% between 2020 and 2024 for residential builds. Drivers:
- Steel and concrete price increases post-2021
- A weaker yen raising imported material costs
- Chronic labor shortage in construction trades
- The 2024 problem (2024年問題) — overtime caps on construction workers, reducing effective labor supply
Developers passed these costs through. They had to. Margins on new condos in central Tokyo were already thin.
2. Land prices in central wards kept climbing
The Public Notice of Land Prices (地価公示) showed residential land in Chiyoda, Chuo, Minato, Shibuya, and Shinjuku rising every year from 2021 onward. Commercial-zoned land in the same wards rose faster. When the land under a new tower costs more, the per-unit price rises before a single beam is set.
3. Ultra-low interest rates lasted longer than anyone expected
Until March 2024, the Bank of Japan (日本銀行) held the policy rate at -0.1%. Variable mortgage rates for prime borrowers sat near 0.3–0.5%. That is the lowest cost of capital in the developed world. A buyer financing ¥100 million at 0.4% pays roughly ¥255,000 per month over 35 years. The same loan at 2% would be ¥331,000. Cheap debt expanded what buyers could bid.
4. Foreign and investment demand concentrated in central Tokyo
The weak yen made Tokyo property cheap in USD, EUR, SGD, and HKD terms. A ¥150 million unit that cost USD 1.4 million in January 2021 cost about USD 1.0 million by late 2024 at the same yen price. Foreign buyers — individuals and funds — concentrated in Minato, Shibuya, Chuo, and Chiyoda. Domestic dual-income high-earner households (パワーカップル) competed for the same stock.
5. Supply did not keep up
New condo supply in greater Tokyo has been declining since the mid-2000s. In 2023, only about 26,000 new units were supplied across the entire metropolitan area — roughly half the 2000s peak. Land in central wards is scarce. Redevelopment projects take 10+ years. When demand surged, supply could not respond quickly.
What this means for you as a buyer
The price you see today reflects all five forces compounding. That changes the risk profile.
- You are paying a peak-cycle premium on new condos. New supply in central wards is priced for a continuation of current conditions.
- Used condos are a less stretched entry point, but the spread between new and used has widened sharply. A 10-year-old unit in the same building can be 30–40% cheaper than a new unit nearby. That gap is your reference.
- Currency is doing some of the work for foreign buyers. If the yen strengthens to 130 or 120 per USD, your yen-denominated asset gains in your home currency even with flat yen prices. The reverse is also true.
Will it last? Four scenarios
We do not predict. We map scenarios and assign rough weight.
Scenario A: Continued grind higher (probability: moderate)
Rates rise slowly. Construction costs stay elevated. Central Tokyo supply stays tight. Foreign demand persists. Prices rise another 5–15% over 3–5 years, then plateau. This is the consensus base case among Japanese developers and major brokerages.
Scenario B: Plateau and divergence (probability: moderate)
Central ward prices flatten near current levels. Suburban and lower-grade stock softens 5–10% as rising rates bite domestic buyers. The gap between prime and non-prime widens. Liquidity in the middle of the market thins.
Scenario C: Meaningful correction (probability: low to moderate)
The Bank of Japan raises rates faster than expected. Variable mortgage rates hit 1.5–2%. Domestic buyer affordability drops sharply. Foreign demand pauses if the yen strengthens. New condo prices in central wards correct 10–20%; used prices follow with lag. Historical reference: the 2008–2012 period saw a similar drawdown in some submarkets.
Scenario D: Structural reset (probability: low)
A combination of fast rate hikes, yen strengthening, and a global risk-off event. Prices fall 25%+ from peak. This is the 1990s analogy that gets cited too easily. The underlying conditions are different — household leverage is lower, supply is tighter, and the population in central Tokyo is still growing. But the risk is not zero.
The signals to watch
Track these. They will tell you which scenario is unfolding before the price index does.
- Variable mortgage rates at the major banks (Mitsubishi UFJ, SMBC, Mizuho, Rakuten, au Jibun). A move from 0.3% to 1.0%+ would shift buyer behavior materially.
- Yen / USD rate. A sustained move below ¥140 would reduce foreign demand at the margin.
- New condo contract rate (初月契約率) in greater Tokyo. The healthy threshold is 70%. Sustained readings below 60% signal demand fatigue.
- Land Price Notice (地価公示) released each March. Year-on-year deceleration in central wards is the early signal.
- Construction starts (住宅着工統計) from the Ministry of Land, Infrastructure, Transport and Tourism. A pickup would ease supply pressure over a 2–3 year horizon.
How we approach this at RE : public
When a client sends us a property they are considering, we run a reference estimate that separates the cycle premium from the structural value. We look at:
- The unit's price per square meter against the same building's last 24 months of transactions
- The building's price per square meter against three to five comparable buildings within 800 meters
- The implied cycle premium versus the 2019 baseline
- The rental yield at current asking price (a yield below 3.0% gross in central wards is a yellow flag)
- The risk profile if rates normalize to 1.5%
The output is an analysis result. Not a number you can take to a bank. A frame you can use to negotiate, walk away, or proceed with clear eyes.
Three practical rules for entering this market now
If you are buying in 2025, these are the rules we share with every client.
- Do not anchor on the asking price. In Tokyo, asking prices for used condos are often set 5–10% above the realistic transaction range. Negotiation is normal, especially on units that have sat for 60+ days.
- Stress-test your financing at 2%. Even if you lock a variable rate at 0.5%, run the numbers assuming the rate doubles or triples over the loan life. If the payment becomes uncomfortable, the unit is too expensive for your balance sheet.
- Separate "place to live" from "investment." If you plan to live in the unit for 10+ years, short-term price moves matter less. If you are buying as an investor, the cycle premium is your problem. Be honest about which one you are.
The honest summary
Tokyo condo prices rose 30%+ since 2020 because five forces — construction costs, land prices, ultra-low rates, foreign demand, and constrained supply — stacked at once. Most of those forces are still in place. Some are starting to weaken. The tendency from here is more likely sideways-to-modestly-up than a continuation of the 2020–2023 pace. The risk of a 10%+ correction in non-prime stock is real if rates normalize faster than expected.
That is the frame. The specific unit you are looking at is a different question, and that one needs its own analysis.
This is not investment advice. The final decision is yours.
For a second opinion on a specific property, visit RE : public.