Articles Property Investments Market at A Glance: What is Happening in Tokyo Property Market?

Market at A Glance: What is Happening in Tokyo Property Market?

The Tokyo Property Market is an ever-growing sector. Get to learn the population trends and residential price growth by reading here.

Aging and Shrinking Population

Japan has been known for its long life-expectancy. On the other hand, it has seen record-low births for the last six years as of December 2022. In 2021, only 811,622 babies were born, and this figure is the lowest since records began in 1899, according to an NHK report.

Like you see in Figure 1, the population in Japan is projected to decline after peaking in around 2010, mainly due to the low fertility. Looking at the population projection by age group (Figure 2), the working age population (15 to 64 years old) is also on the decline. Unless Japan changes its immigration policy, this picture will not change drastically. This may sound like a gloomy outlook to many of you.

[Figure 1] Total population projection with high- mid- and low-fertility assumption

[Figure 2] Total population projection by age group

Source: Population & Household Projection by National Institute of Population and Social Security Research (2018)

Now we look at the population projection by prefecture. As you see in Figure 3, only Tokyo and Okinawa will see population growth until 2025. After 2030, all prefectures will see decline of population (Figure 4), whether mild or steep.

[Figure 3] 2020-2025                                            [Figure 4] 2030-2035

Source: Population & Household Projection by National Institute of Population and Social Security Research (2018)

We talked about the shrinking population in Japan and that was the case for Tokyo. But actually, if you have a close look at Tokyo, there are areas with population growth projected even after 2030 [Figure 5]. Tokyo Metropolis is consisted of 23 special wards (“ku”) in the central area and surrounding cities. And the population in these 23 wards is still expected to grow further.

Residential Condominium Price Growing despite Population Decline

Now, how about the property price?

Figure 6 shows the average price of Tokyo condominiums in the secondary market. Despite the population decline, the price has been growing strongly.

[Figure 6] Average price of Tokyo condominiums in the secondary market

Source: 三菱UFJ不動産販売WEBサイトより。

Why? This has something to do with who is buying the condominiums. Currently, the main buyers of Tokyo condominiums are dual-income households in which both husband and wife work and have double sources of income. This is also supported by Figure 7, which shows the number of dual-income households. This trend of dual-income households driving the condo prices is expected to continue, because more and more young families opt for this dual-income working style.

[Figure 7] Number of dual-income households

Source: 三菱UFJ不動産販売WEBサイトより。

And when we look at the residential land prices in Tokyo, the 23 wards, particularly centrally located wards shown in yellow, orange or green colors in the map below [Figure 8] are experiencing strong land price growth. Minato-ku recorded over 60% price increase in less than a decade.

[Figure 8] Residential price increase between 2013 to 2021 in Tokyo 23 wards

Location is the Key

From what we have seen up to now, you may be already thinking the location is the key to invest in Tokyo and the 23 wards seem to have potential. But still, the area the 23 wards cover is vast and how do you start looking for investment property for you? Then we recommend you start with the areas along JR Yamanote Line.

[Figure 9] Tokyo railway and subway map

Tokyo has a very complex train network that takes you almost everywhere in the city, if you do not mind transiting and walking from platform to platform in huge train stations. But in order to make as less transits as possible, especially when going to work or to school, people usually start considering where to live based on the train lines/stations they would like to use in their daily life.

[Figure 10] Popular train lines that residents in Greater Tokyo want to live close to

Survey by Recruit (SUUMO portal).

The “SUUMO City Ranking 2022 Greater Tokyo Area Edition” was conducted for 10,000 people aged 20 to 49 living in Tokyo, Kanagawa, Saitama, Chiba, and Ibaraki prefectures.

And a survey conducted by Recruit Co.,Ltd. through a portal SUUMO found that the JR Yamanote Line is the most popular train line among the 10,000 respondents aged between 20 to 49 living in Tokyo and surrounding Kanagawa, Saitama, Chiba, and Ibaraki prefectures.

This popular Yamanote Line goes through all the high land-price growth wards we looked at.

[Figure 11]

So, if you are not sure which area to start with in your investment property hunt, it is always a good idea to start looking for properties near Yamanote Line.

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