Tokyo’s housing sector continues to record sustained price increases for condominium apartments across the capital’s 23 wards, according to a report by Savills Japan. This upward trend is attributed to persistently strong demand for residential units amid a tight supply in the market.
In its latest report, Savills noted that stable population growth, relatively low interest rates, and improving wages driven by the successful annual Shunto wage negotiations have all encouraged individuals to move toward property ownership.
On the supply side, however, the market continues to feel the impact of constraints stemming from rising land and construction costs, a shortage of developable residential land, and competition from developers in other real estate sectors.
The five central wards stand out with exceptionally high demand, as these areas attract high-net-worth individuals and foreign buyers who view real estate as a long-term investment opportunity or as secondary residences, supported by their scarcity and stable value.
Looking ahead, Savills expects a gradual shift in demand toward areas adjacent to central Greater Tokyo, which could stimulate price growth in those neighborhoods. The report also suggests that larger residential units are likely to benefit more, as families increasingly seek options that offer more spacious living environments compared to generally elevated price levels.
As prices continue to rise and affordability becomes more challenging for some buyers, Savills anticipates a noticeable increase in demand for rental housing. This shift may lead individuals who had planned to purchase homes to remain renters for longer periods.
In addition, ongoing positive migration—particularly from foreign residents—is expected to support rental demand and further enhance the value of residential properties.
Despite a decline in the contract rate for new condominiums in the 23W area to an average of 63% in the third quarter of 2025, compared with an average of 68% over the previous three years, fundamental market factors such as strong demand and limited supply continue to underpin price stability.
Savills emphasized that key economic factors—including rising construction costs, continued population growth, and improving wages—will keep Tokyo’s housing market robust. Although sales activity has slowed recently, the firm points to ongoing price resilience driven by the sustained balance between supply and demand.
