Rising Property Prices in Tokyo’s Prime Areas: Calls for Action on Foreign Ownership Restrictions

August 21,2025

Tokyo,Japan – A surge in property values,especially in prime districts like Shibuya,is fueling debate over affordability and the role of foreign investment in Japan’s real estate market.Condominium prices have climbed dramatically in recent years, prompting political discussions about potential restrictions on overseas buyers.

Rising Property Values and Affordability concerns

The average price of new condominiums in Tokyo’s 23 central municipalities reached 111.81 million yen, roughly $760,000 USD, in 2024, according to data from the Real Estate Economic Research Institute. The median price jumped to 89.4 million yen, a 9% increase year-over-year. Between 2021 and 2025, median condo prices in Tokyo’s core wards saw an approximate 64% increase, considerably outpacing the 26% rise across the wider Tokyo metropolitan area.

However, wage growth in Japan has remained sluggish. In 2024,Japan ranked 25th out of 34 Organisation for Economic Co-operation and Advancement (OECD) countries in terms of average annual wages adjusted for purchasing power parity,standing at $49,446. This widening gap between income and property prices is raising concerns about housing affordability for Japanese citizens.

Political Response and Potential Legislation

The escalating property prices have caught the attention of Japanese lawmakers. Following recent Upper house elections, the Democratic Party for the People (DPFP) is preparing to propose a bill aimed at curbing foreign real estate purchases. Yuichiro Tamaki, leader of the DPFP, argues that speculative investment by overseas buyers is driving up home prices in urban areas. The proposed legislation could include a “vacancy tax” designed to discourage non-resident property acquisition.

The right-wing populist party, Sanseitō, is also developing its own proposal to limit foreign land acquisition, emphasizing national and economic security concerns. With the ruling coalition lacking a majority in both houses of the Diet, the positions of opposition parties are gaining increasing influence over legislative outcomes.

Foreign Investment Trends

Japan currently maintains very few restrictions on foreign property ownership, unlike nations such as Australia, Canada, and Singapore. Data from Mitsubishi UFJ Trust & Banking Corp, published in March 2025, suggests that between 20% and 40% of new apartments in Tokyo’s Chiyoda, Shibuya, and Minato wards are purchased by foreign buyers. This trend is fueled by a weak yen, relatively low property valuations, and rising construction and labor costs.

Area	Percentage of New apartment Sales to foreign Buyers (March 2025)
Chiyoda	20% – 40%
Shibuya	20% – 40%
Minato	20% – 40%

Experts note that domestic investors also contribute significantly to the rising prices. Makoto sakuma, a senior researcher at NLI Research Institute, points out that low interest rates and significant liquidity in the market are also driving urban property demand.

The Urban-Rural Divide

While major cities like Tokyo experience a property boom, Japan’s overall population has been declining since 2008, creating a stark contrast in demand between urban and rural areas. As of 2023, approximately 9 million homes in the countryside stand abandoned, known as “akiya.”

These akiya, while frequently enough available at low prices, frequently require notable renovation-ranging from $20,000 to $300,000 depending on the condition and location-and are often far removed from employment and essential services. Cultural preferences and a lack of government support for revitalization further hinder their appeal among many Japanese buyers.

However, these properties are attracting an increasing number of foreign buyers seeking affordable housing, customary architecture, and the opportunity to restore older homes. Parker allen, co-founder of Akiya & Inaka, suggests that any restrictions on foreign property ownership should primarily focus on metropolitan areas where competition with local residents is most intense.

Understanding akiya: A Growing Trend

The phenomenon of “akiya” – abandoned homes – is a unique aspect of Japan’s demographic challenges. Declining birth rates and an aging population have led to a surplus of vacant properties, particularly in rural areas. This presents both challenges and opportunities. While revitalization efforts are underway,the akiya market remains a complex issue with cultural,economic,and logistical hurdles.

Frequently asked Questions About Tokyo real Estate

• What is driving up property prices in Tokyo? Rising construction costs, a weak yen, and increased foreign investment are key factors.
• Are there any restrictions on foreigners buying property in Japan? Currently, Japan has very few restrictions compared to other developed nations.
• What are “akiya”? They are abandoned homes, primarily located in rural Japan, often available for purchase at low prices.
• What is the DPFP proposing to do about property prices? They are preparing a bill to curb foreign real estate purchases and perhaps introduce a “vacancy tax”.
• How does Japan’s wage growth compare to other OECD countries? Japan ranked 25th out of 34 OECD countries in 2024 in terms of average annual wages.
• what is the current state of the Japanese population? Japan’s overall population has been declining since 2008, leading to a significant urban-rural divide.
• What should foreign buyers consider before purchasing property in Japan? Factors like renovation costs, location, and potential legislative changes should be carefully considered.

Do you believe restricting foreign property ownership is the right solution to address affordability concerns in Tokyo? What other measures could the Japanese government take to address this issue?

Share your thoughts in the comments below!

What specific measures are being proposed to address concerns about foreign ownership of Tokyo real estate?

The Tokyo Property Market: A Rapid Ascent

Tokyo’s real estate market, notably in coveted districts like Shibuya, Minato, and Shinjuku, has experienced a significant surge in property values over the past two years. This isn’t a localized bubble; it’s a trend impacting both residential and commercial properties. Several factors contribute to this escalation,including historically low interest rates,a weakening yen,and increased foreign investment. The city, formerly known as Edo, continues to attract global attention, driving demand and pushing prices to record highs.

Foreign Investment & Its Impact on Tokyo Real Estate

Foreign buyers, particularly from asia and North America, are increasingly drawn to Tokyo’s stability, high quality of life, and potential for rental income. This influx of capital has undeniably fueled the price increases in prime areas.

Increased Demand: Foreign investors view Tokyo real estate as a safe haven asset, especially during periods of global economic uncertainty.

Limited Supply: The availability of prime properties in central Tokyo is inherently limited, exacerbating the impact of increased demand.

Currency Exchange Rates: A weaker yen makes Tokyo properties more affordable for foreign buyers holding stronger currencies.

Rental Yields: While not exceptionally high compared to some global cities, Tokyo’s rental yields remain attractive, particularly in areas with high occupancy rates.

Growing Concerns Among Japanese Citizens

The rapid rise in property prices is sparking concern among Japanese citizens, particularly first-time homebuyers. Many are finding it increasingly arduous to afford property in desirable locations, leading to calls for government intervention. The sentiment is that unchecked foreign investment is pricing locals out of the market.

Affordability Crisis: The gap between income levels and property prices is widening, making homeownership unattainable for a growing segment of the population.

Social Equity: Concerns are being raised about the fairness of a system where foreign investors can easily acquire prime real estate while local residents struggle.

Community Impact: Some worry that an overreliance on foreign investment could lead to a homogenization of neighborhoods and a loss of local character.

Potential Restrictions on Foreign Ownership: What’s Being Proposed?

Several proposals are being debated regarding potential restrictions on foreign property ownership in Tokyo. These range from moderate measures to more stringent controls.

1. Increased property Taxes for Foreign Owners: Implementing higher property tax rates for non-resident foreign owners could disincentivize speculative investment.
2. Stricter Lending Criteria: Banks could be required to apply more rigorous lending standards to foreign buyers, reducing their purchasing power.
3. Capital Gains Tax Adjustments: Revising capital gains tax laws to make it less attractive for foreign investors to quickly flip properties.
4. Restrictions on Land Purchases in Specific Zones: Designating certain areas as “protected zones” where foreign ownership is limited or prohibited.
5. Enhanced Scrutiny of Foreign investment Funds: Increased oversight of large-scale property acquisitions by foreign investment funds.

Case Study: The Impact in Shibuya

Shibuya, known for its trendy atmosphere and vibrant nightlife, has been particularly affected by rising property prices. Land values in Shibuya have seen double-digit percentage increases in recent years, driven largely by foreign investment in commercial properties and luxury residential developments. This has led to the displacement of some local businesses and a shift in the neighborhood’s character. local residents have voiced concerns about the loss of affordable housing options and the increasing commercialization of the area.

Benefits of Potential Restrictions

While restrictions on foreign ownership could have drawbacks, proponents argue they could offer several benefits:

Increased Affordability: Making property more accessible to Japanese citizens.

Stabilized Market: Reducing speculative bubbles and promoting a more lasting real estate market.

Preservation of Local Communities: Protecting the character and identity of neighborhoods.

Increased Tax revenue (from domestic buyers): Perhaps shifting the tax base towards local residents.

Practical Tips for Navigating the Tokyo Property Market (2025)

For both domestic and foreign buyers, navigating the Tokyo property market requires careful planning and due diligence.

Work with a Reputable Real Estate Agent: Choose an agent with extensive experience in the Tokyo market and a strong understanding of local regulations.

Secure Financing in Advance: Obtain pre-approval for a mortgage to streamline the purchasing process.

Conduct Thorough Due Diligence: Investigate the property’s history, zoning regulations, and potential environmental concerns.

Consider Location Carefully: Research different neighborhoods to find an area that aligns with your lifestyle and budget.

Be Prepared for Competition: The Tokyo property market is highly competitive, so be prepared to act quickly when you find a property you like.

The Future of Tokyo Real Estate: A Balancing Act

The debate over foreign ownership restrictions highlights the complex challenges facing Tokyo’s real estate market. Finding a balance between attracting foreign investment and ensuring affordability for local residents will be crucial for the city’s long-term sustainability. the government’s response to these concerns will