Housing prices rise in Japanese cities and it takes 10 years to buy a home

International Business News – The national average price of residential land in Japan as of Jan. 1, 2023, is 1.4 percent higher than the previous year, according to public land prices released by the Ministry of Land, Infrastructure, Transport and Tourism on March 22. This is 0.9 percentage points higher than last year. Land prices are supported by strong real demand in and around cities, driven by three “east winds” including an increase in dual-income households, low interest rates and the popularity of working from home.

With an average price of more than 300 million yen (about 15,740,000 yuan) per unit, “the Park House Gran Sanpancho 26” in Tokyo’s Chiyoda ward, which will be on sale in the fall of 2022, including the Mitsubishi Domo Residence, is almost sold out despite its high price. In Tokyo, it is not uncommon to see apartment buildings worth more than 100 million yen, including second-hand houses.

Residential land in Tokyo’s 23 wards rose by 3.4% in 2023 . The average price of new residential buildings for sale by subdivision across Japan in 2022, as aggregated by the Real Estate Economic Research Institute (Shinjuku, Tokyo), is 51.21 million yen (about 2.69 million yuan), up about 13 million yen (about 680,000 yuan) from 10 years ago. Compared to the average annual income of Japanese regular employees reached about 10 times. The average price in Tokyo’s 23 wards rose by about 30 million yen to 82.36 million yen (about 4.33 million yuan).

The rise in residential property prices also spread to the local core cities.

This year, for the first time, all 35 single-family apartments in Fukuoka’s upscale neighborhoods are on sale for more than 100 million yen. Daiwa Housing Industries, which is in charge of the development, said it had signed up more than 30 units, adding that “demand for second homes from residents in the Kyushu area is also prominent.” In addition to Fukuoka, housing land increased by 8.0 percent, as well as nearby Tsukizino City (up 8.1 percent) and Ono City (up 8.6 percent).

In terms of residential land in 2023, Hokkaido monopolizes the top 100 locations with the highest volatility. The cities of Kitaichi and Ebetsuki, two of the major suburbs of Sapporo, have been major destinations for demand for Porporo. Combined with low prices, prices have risen by about 30%. At the west entrance of JR North Hiroshima Station, construction of hotels and commercial facilities is also moving forward with the opening of the new course.

In Japan, where two-earner families account for about 70 percent of the total, there has also been an increase in high-income families known as the “power couple.” In addition, historically low interest rates are driving up the desire to buy homes, and changes in working methods such as working from home, which have become popular due to the COVID-19 pandemic, are expanding the areas where housing land is increasing.

Looking at the suburbs of Tokyo, Urayasu City in Chiba Prefecture, which has easy access to the city center, rose 9.7%, and demand for homes in the surrounding areas is increasing.

However, in addition to signs of an overheated market, negative factors such as rising material prices are now beginning to have an impact.

The number of new residential buildings listed in the Tokyo area fell 20.4 per cent in February from a year earlier, according to the Realestate Economic Research Institute. Toru Katamura, president of Mitsui Residential, said there were “some projects that felt (opening prices) were too high”. The number of new single-family homes for sale nationwide fell 3.9 per cent in January, the third consecutive month below the previous year.

Shigeo Hirayama of the Urban Future Research Institute predicts that “while real demand will remain strong for a while, the trend of areas that combine transportation, housing and relative cheap-affordability will intensify.”