Average Price of New Apartments in Tokyo’s 23 Wards Tops ¥100 million; Prices in Metropolitan Area Sets New Record

The Yomiuri Shimbun

17:44 JST, January 26, 2024

The average sale price of newly built apartments in Tokyo’s 23 wards jumped to ¥114.83 million in 2023, an increase of 39.4% from the previous year and topping ¥100 million for the first time.

According to figures released by the Real Estate Economic Institute Co. on Thursday, the steady supply of luxury properties in the central Tokyo area pushed up the average new apartment price.

New apartment prices in the Tokyo metropolitan area, which includes Tokyo, Kanagawa, Saitama and Chiba prefectures, climbed 28.8% to ¥81.01 million and set a record high for the third consecutive year.

New apartments worth ¥100 million or more, known in Japanese as “okushon,” accounted for about 15% of all units sold in the Tokyo metropolitan area. The most expensive apartment was sold for ¥4.5 billion. It is not unusual for high-income households in which both adults work to take out a “pair loan” to purchase a high-end property.

“Buying an okushon is no longer extraordinary,” said Tadashi Matsuda, a senior researcher at the institute.

In autumn 2023, real estate business Daikyo Inc. started selling condominiums at the Lige Yoyogiuehara Terrace complex in Shibuya Ward, Tokyo. Lige is Daikyo’s premier brand, and this is the company’s first such project in the metropolitan area for 21 years. Even the most compact of the 12 units, which has a total area of about 85 square meters, costs more than ¥200 million. Despite the hefty price tag, “We’ve been swamped with enquiries ever since we started advertising these properties,” a Daikyo spokesperson said.

Surging land and construction costs are major factors behind the increase in apartment prices. In addition, a shortage of properties among strong demand has also affected prices. In 2023, the number of newly built apartments sold in the metropolitan area dipped 9.1% to 26,886.

Developers have been buying up land in central Tokyo to use as sites for hotels and other facilities targeting visitors to Japan. Finding land suitable for apartment complexes has become more difficult, which has spurred the increase in land prices.

Prices of second-hand apartments in Tokyo have also soared. According to real estate research company Tokyo Kantei Co., the average price of a 70-square-meter second-hand apartment in Tokyo’s 23 wards in 2023 was ¥70.55 million. This price has climbed by at least ¥10 million over the past three years.

“I think the prices of apartments in central Tokyo and those in the outskirts will become more polarized,” said Masayuki Takahashi, chief researcher at Tokyo Kantei.

Financial institutions are hiking basic interest rates for fixed-rate mortgages due to the rise in long-term interest rates. However, interest rates remain low for floating-rate mortgages, which most people chose to use.