Japan's capital region has seen the average price of new apartments exceed 100 million yen (approximately $980,000) for the first time in the first half of this year. Prices have surged not only in Tokyo's 23 wards but also in Chiba and Kanagawa. The combination of rising material and labor costs, along with a decrease in supply, has led developers to focus on areas where they can command higher prices, suggesting that the upward trend in new apartment prices will continue for the foreseeable future.
According to the Asahi Shimbun, citing data released by the Japan Real Estate Economic Institute, the average price of newly built apartments in the capital region rose 13.1% year-on-year to 101.35 million yen in the first half of this year. This marks the first time the average price in the capital region has surpassed 100 million yen.
In Tokyo's 23 wards, the average price of new apartments reached a record high of 142.49 million yen, up 9.1% from the previous year. In Chiba, prices skyrocketed by 56.8% to 89.97 million yen, while Kanagawa saw a 20% increase to 83.46 million yen. Conversely, Saitama experienced a slight decline of 1.3%, with an average price of 64.69 million yen. While Tokyo's 23 wards had the highest average price, Chiba and Kanagawa recorded greater percentage increases. Notably, tower apartments in Chiba, particularly in Kaihinmakuhari and Funabashi, have gained popularity, driving up the average price.
The primary reasons for the rising prices of new apartments include increased material and labor costs. According to the Japan Federation of Construction Contractors, construction costs have risen by approximately 30% over the past five years. The growing demand for data center construction has also led to a shortage of skilled workers for electrical and HVAC installations, further increasing construction costs. As costs rise, developers are concentrating their efforts on urban and popular areas where they can charge higher prices. Tadashi Matsuda, a senior researcher at the Japan Real Estate Economic Institute, explained that competition among companies for land in desirable locations has driven up land prices even further.
The supply of new apartments has also significantly decreased. The number of new apartments in the capital region fell from 95,635 units in 2000 to just 21,962 last year. In the first half of this year, the supply dropped by 64 units year-on-year to 7,989 units. This marks the third consecutive year that the supply has fallen below 10,000 units, and it is the second-lowest level since the first half of 2020, when only 7,489 units were supplied due to the COVID-19 pandemic.
Developers are also taking a cautious approach to new projects. Sumitomo Realty & Development announced during its May financial briefing that it would not rush to sell 6,000 unsold apartments built when construction costs were lower and would selectively pursue new projects.
In response to rising prices, some apartments are now offering differentiated services. Tokyo Tatemono plans to introduce a paid taxi service for children at an apartment set to be completed in Arakawa, Tokyo, in July next year. The service will notify the apartment intercom when a taxi arrives, even if the child does not have a mobile phone. The starting price for a three-bedroom unit with a floor area of 70 square meters is around 79 million yen.
Tokyu Land Corporation's new apartment in Sagamihara, Kanagawa, features a lounge on the 28th floor with a bookshelf containing about 400 books and a café bar offering meals. Instead of lowering prices, the strategy focuses on enhancing communal facilities and services to increase market appeal.
The Japan Real Estate Economic Institute forecasts that high prices will persist. If geopolitical tensions in the Middle East continue to keep material costs elevated, this could further drive up apartment prices beyond 2027. Matsuda stated, "In the long term, the likelihood of new apartment prices declining is very low."
* This article has been translated by AI.
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