Surge in real estate prices in major Tokyo’s regions erupts call to curb foreign ownership

In Tokyo’s Shibuya district, towering skyscrapers and luxurious apartment buildings represent the frenzy of Japanese city real estate.

According to a report by the Institute for Real Estate Economics earlier this year, in 2024, the average price for new condominiums in 23 municipalities in the heart of Tokyo reached 111.81 million yen (approximately $760,000). Median price – better gauge in the market – was 89.4 million yen, up 9% from the previous year.

Based on median, condo prices in Tokyo’s 23 wards rose by around 64% between 2021 and 2025, far surpassing the 26% rise in the Greater Tokyo region.

Meanwhile, Japan’s income levels remain low compared to some of its developed peers, with lower minimum wages and widest gender wages, making them concerned about affordability. In 2024, Japan ranked 25 of the 34 members of the Economic Co-operation and Development Agency, ranked at $49,446 on an average annual wage basis, with purchased electricity parity adjusted.

Real estate prices in major Tokyo’s districts have skyrocketed, partly driven by rising construction and labor costs.

The city’s property boom has attracted political attention, with debates on foreign capital restrictions being featured during the recent Senate elections. Unlike countries such as Australia, Canada and Singapore, Japan has virtually no restrictions on foreign property ownership.

Local media said Democrats or DPFP, who secured solid profits in the July election, are expected to table legislation that would curb foreign property purchases as early as the fall’s extraordinary diet session. DPFP leader Tanaka Kiyoshi argues that urban housing prices have risen partially as foreign investors purchased property to buy property for non-resident speculative purposes, bringing the idea of ​​a “vacancies tax” to curb such acquisitions.

Meanwhile, Sansetou, a right-wing populist party campaigning on the Japan First anti-immigration platform, has prepared its own proposal to curb foreign land acquisitions, but has yet to specify a timeline for submissions.

The ruling coalition lacks a majority in both diet homes, so the opposition’s position is becoming increasingly important in shaping legislative outcomes.

Tobias Harris, founder of Japanese Foresight, a political risk advisory firm, said it would be difficult to separate foreign property ownership from broader discussions about Japan’s foreign population. Though not at the heart of Sanseitō’s platform, he said the problem stands out.

“Party rhetoric on this issue highlights both national and economic security, suggesting the risk of certain foreigners buying property and the impact on Japan’s quality of life if they can’t afford a home.”

Although it is difficult to pinpoint the exact size of foreign purchases as Japan does not publish official statistics on buyers’ nationalities, a six-month survey by Mitsubishi UFJ Trust & Banking Corporation, published in March 2025, found that 20% to 40% of new apartments are generally on sale in Kyoda, Shibuya and Minatoward, Tokyo.

“The purchase of foreigners is one factor, but domestic investors and residents are also buying,” says Makoto Sakuma, a senior researcher at the NLI Institute of Japan’s think tank.

Sakuma noted that although the Bank of Japan has been raising interest rates since March last year, they remained virtually low, and that there is still sufficient liquidity in markets where many of them flow into city property.

Harris said the prospects for legislative change depend on Japan’s political landscape. Changing the dynamics of the new prime minister and coalition can reconstruct how opposition parties place issues such as foreign ownership on the agenda.

Romeo Marcantuni, a doctoral candidate at Waseda University, focusing on Japanese opposition politics, said it is unlikely that the salience of the issue that goes on ahead will decline, saying Sansate has increased rhetoric towards foreigners and foreign capitals since winning three House seats last year.

Still, he noted that legislative paths are uncertain as more pressing priorities such as tax cuts, cash handouts and gasoline collection are likely to dominate the debate in the short term.

Tokyo’s population continues to grow, but Japan’s entire population has been decreasing since 2008, creating a fierce gap in demand between urban and rural areas.

And while there was a real estate boom in major cities, as of 2023, the country had around 9 million abandoned homes, known as Akiya, in mostly rural areas.

Akiya is cheap to buy, but it does not match the needs of many domestic buyers. Many require renovations from $20,000 to $300,000, depending on the state and location of the property. Limited government support for cultural stigma around second-hand homes and regeneration further limits their appeal.

“If you look at the countryside, there’s a big problem with stagnation, prices aren’t rising, houses aren’t selling,” says Parker Allen, co-founder of Akiya and Inaka, a real estate platform that helps overseas buyers find vacant homes in rural Japan.

Akiya is hardly appealing to most Japanese people, but they are attracting the attention of foreign buyers looking for low prices, traditional architecture and romance to restore old homes. Allen warns that potential restrictions on foreign property ownership should only be aimed at the Metropolitan market, where competition with local people is the most intense.

“The most logical way to do this is to concentrate in the city,” he said. “If foreign purchases are accelerating, prices for some people are out of the market, but here we are only talking about Fifth Avenue in Japan.”