Rents Mark 30-Year-High Rate of Rise; Decrease in Disposable Income May Dampen Personal Consumption

By Shingo Hashitani and Ryuji Hashimoto / Yomiuri Shimbun Staff Writers

14:18 JST, April 30, 2025

Rents for properties in Tokyo’s 23 wards rose at the highest rate in over 30 years in March.

Rents have been regarded as rock solid within the consumer price index (CPI) due to their lack of large fluctuations in the long term. However, the CPI in Tokyo’s 23 wards for March showed an increase of 1.1% in private-sector rents year on year, the highest level since October 1994 — 30 years and five months ago.

As rents account for a large portion of household spending, some economists point out that a decrease in disposable income amid increased inflation may result in sluggish personal consumption.

Nationwide rises

In spring, a man moved from the Shikoku region to Tokyo after enrolling in graduate school at the University of Tokyo. He looked to rent an apartment or similar kind of dwelling mainly in Bunkyo Ward, Tokyo, near the university’s Hongo Campus, but soon gave up because of the high rents there. He finally signed a contract to rent an apartment in Adachi Ward.

“With my daily expenses increasing due to rising prices, the amount I can pay for rent is limited,” he said.

According to Bestex, a real estate brokering firm in Bunkyo Ward, the average rent of a studio apartment around the university’s Hongo Campus with about 20 square meters of floor space is currently around ¥140,000 a month. The amount has risen ¥10,000-¥20,000 compared with five years ago.

Rents have been rising across the country. In March, the nationwide CPI rose 0.4%, marking the 20th consecutive monthly increase since June 2023.

Postponing purchases

Rents of apartments for individuals with 30 square meters or less of floor space in Tokyo’s 23 wards rose 7.6% from five years ago, according to research by At Home Co., a major real estate service firm. The research was based on the average advertised rent for an apartment in February this year.

Rents for family dwellings with 50-70 square meters of floor space rose 26.1% during the same period.

Rents in Osaka, Nagoya and Fukuoka for both individuals and families also rose.

Multiple factors lie behind the increase.

In the case of renting newly built apartments, higher rents tend to be set because of construction costs and interest rates of loans.

In the case of existing apartments, there is an increasing tendency for owners to pass onto the renter increasingly high refurbishing costs, electricity bills in shared spaces and other miscellaneous costs.

Also, rents for family-size apartments are largely influenced by rising prices of apartments up for sale.

According to research released by Real Estate Economic Institute Co. on April 21, the average price of newly built apartments rose 7.5% from the previous fiscal year to ¥81.35 million, a new record high. The research was based on offer prices per unit in the Tokyo metropolitan region — Tokyo, Kanagawa, Saitama and Chiba prefectures — in fiscal 2024.

In Tokyo’s 23 wards alone, the average price of the properties rose 11.2% to ¥116.32 million, exceeding the ¥100 million mark for two straight fiscal years.

Due to the price surge, an increasing number of people have given up on purchasing and have instead opted to rent. The resultant rise in demand for rental apartments has pushed up rents.

Trend likely to persist

Landlords plan to continue raising their rents, so it is likely that the upward trend will persist for the time being.

Daito Trust Construction Co., a major real estate company which manages a group of about 1.3 million rental properties, has notified tenants individually about future increases to their rents.

So far, the company has notified tenants in about 500,000 dwellings of rent hikes scheduled to take effect by the end of this year. The company said that about 80% of the tenants have already accepted the proposed rent increase.

“It is healthy that rents rise with the general rise of prices,” said a 64-year-old man who owns about 90 rental properties in the Tokyo metropolitan area said.

Rent accounts for a large percentage of household spending, and it is difficult to reduce the amount paid, unlike expenses for meals and other daily goods and services.

“It is possible that rents will continue to rise, mainly in urban areas,” said Yoshikazu Funakubo, a real estate business expert at Mitsubishi UFJ Trust and Banking Corp. “It is also possible that it will negatively impact personal consumption.”