A 70-square-meter “manshon” (high-rise condos) now costs JPY45.5 million ($291,000), compared to the average annual income of JPY4.51 million, according to data from real estate market research firm Tokyo Kantei.
The price-to-income ratio has risen from 9.66 last year to 10.09 now, it added, as reported by The Japan Times.
With wages failing to keep pace with rising costs, developers are increasingly targeting the high-end market.
Foreign buyers are contributing to the price hike. The weak yen has made Japanese properties more affordable for international investors, whose influx has further driven up prices.
“The gap between income growth and condominium price increases has widened as housing costs have outpaced wage growth,” said Masayuki Takahashi, a senior researcher at Tokyo Kantei.
While major urban areas like Tokyo have traditionally seen major price increases, a similar trend is now observed in regional areas with the focus shifting toward high-end properties targeting wealthy buyers, he added.
Despite some momentum in wage increases, Takahashi predicts the gap between income and condominium prices will continue to grow.
Developers are prioritizing luxury properties and prime urban locations, making price reductions unlikely, he added.
Takahashi also noted that while potential interest rate hikes by the Bank of Japan could cool demand in the general market, their effect on the luxury segment would be minimal.
Wealthy buyers often pay in cash, making them less impacted by rising borrowing costs, he added.
Last year, the price of new apartments in Tokyo averaged more than JPY100 million yen (US$677,800) annually for the first time ever, about 25 times higher than Japan’s nationwide salary.
The average price of newly built apartments in Japan’s capital rose 39.4% from the previous year to a record JPY114.8 million yen in 2023, according to a Real Estate Economic Institute report cited by Reuters.
