Is now a good time to sell real estate in Tokyo? Expert Insight from Plaza Homes

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Real estate prices in Tokyo have skyrocketed since the pandemic, with the average price of a new condominium in central Tokyo topping ¥100 million for the first time in 2023 and continuing to hold above the ¥100 million mark in 2024. What has been driving this strong growth and should we expect to see a continuation in 2025? 

Whether you are considering buying or selling, it is important to keep a close eye on market conditions, as the underlying demand and supply conditions seem to support a continued rise in prices – at least in certain areas and types of properties.

We will briefly go over what is expected to play out this year, as predicted by Plaza Homes, a bilingual real estate agency in Tokyo with over 55 years of experience helping foreign buyers and sellers in the local market.

Supply and demand factors

First, let’s take a look at market fundamentals. On the supply side, condominium developers have faced a number of challenges, which have had a spillover effect into the number of new properties available to buyers. 

The most notable being the shortage of land in central Tokyo and overall soaring construction costs. This trend started in the build-up to the Tokyo 2020 Olympics but has been exacerbated by the weak yen, which has led to a boom in inbound tourism and competition with hotel developers for land in central areas.

On the demand side, wealthy foreign buyers and “power couples” have shown a strong appetite for purchasing central Tokyo properties. 

A safe and comfortable place to live

Many foreign buyers own real estate in multiple countries and see Tokyo as a safe and comfortable place to live. They are buying property in Tokyo for the purposes of relocating or to use as a second home when they are visiting. So the weak yen plays a role in making Tokyo real estate relatively inexpensive compared to other global markets.

Tokyo real estate is inexpensive compared to most other major cities worldwide. Source: Plaza Homes

Domestically, power couples, generally defined as dual-income families with a household income of ¥15 to ¥20 million, have sufficient income to qualify for a mortgage loan needed to buy a ¥100 million home.

With strong demand from both domestic and foreign buyers, it is also important to note that the prices of resale condominium units have also been rising concurrently with newly built properties. Traditionally, Japanese buyers tend to prefer new developments but with high competition for newer properties some buyers have warmed to the idea of buying an older property to renovate.

Will prices continue to rise?

With strong demand and very limited supply, Plaza Homes predicts  that 2025 will indeed be a year in which owners should seriously consider whether it is time to sell and take profit but with the key proviso that some areas of Tokyo started showing a declining trend in 2024. Here are some points to take note of:

• Prices for properties in central Tokyo, particularly Chiyoda, Minato and Chuo wards continued to climb in 2024, staying above the ¥100 million level and will likely continue to increase this year.
• Resale properties in western and eastern wards in Tokyo declined slightly in 2024.
• Japanese buyers overwhelming prefer properties within a 10-minute walk of the nearest station, so distance from the station plays an important role in assessing a property’s value.

Factors affecting the market

What are the factors that are affecting the market? Plaza Homes has created a very insightful video that gives detailed analysis of the factors that will likely affect market trends this year and beyond.

Screen capture from Plaza Homes video on 2025 market trends and whether it is a good time to sell. Source: Plaza Homes

We highly recommend watching the entire video because it provides many insightful points that we cannot fully cover here. In summary, however, here are some points worth noting:

• The main factors affecting foreign demand include the weak yen, inbound tourism and the fact that the Tokyo market continues to be undervalued.
• On the domestic side, factors affecting the market strong include demand from high-income couples, homeowners in their 30s and 40s who are looking to move and increased demand from seniors. Against this is also the backdrop of interest rates, which are seen to remain low at least for the next few years.

In summary, it may be a good time to sell your condominium in Tokyo this year, if your property meets certain criteria and as always, real estate is a very local business. As with any major financial decision, the best course is to consult an expert who has had experience with local market conditions and who can help you achieve your particular objectives.

Plaza Homes

Plaza Homes is one of the leading bilingual real estate brokerages in Tokyo, with over 55 years of experience helping foreigners buy and sell real estate in Japan. If you are considering buying or selling a property in Tokyo, please contact them below to get started!