Housing costs in Tokyo are skyrocketing. This poses a serious challenge for young professionals looking for a place to live in Japan's capital. Because of this, they are forced to either resort to renting or move to more affordable places.

Investment boom and impact on prices

For a long time, Japan experienced deflation and economic stagnation. Recently, however, the country has witnessed an investment boom that has led to rising home prices. Foreign investors have been actively investing in local real estate, and the weak yen has become an attractive factor for international buyers.

The rise in housing prices in the center of Tokyo is partly due to the emergence of numerous luxury housing units on the market. An example of such properties is the Azabudai Hills complex, which includes the country's largest office tower and about 1,400 residential units.

Level of housing affordability for young professionals

The average price of a condominium in central Tokyo rose 60% in the first half of 2023 to ¥129.6 million (about $865,000). This means that a 60-square-meter apartment in Tokyo costs 15 times more than the salary of a skilled worker. For young professionals just starting out in their careers, buying a home is becoming an almost unattainable dream.

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Comparison with other world megacities

According to a UBS real estate report, Tokyo has become the second most unaffordable city in the world for locals, second only to Hong Kong. Nevertheless, the cost of housing in Tokyo is still significantly lower than in such global metropolitan areas as London. A luxury apartment in Tokyo can cost almost half as much as in Hong Kong and 45% less than in London.

Alternatives

In light of the high housing prices in Tokyo, young professionals are looking for alternative solutions. Many of them opt for renting to avoid the high costs of buying a home. Others choose to move to cheap suburbs and smaller cities, following a trend also seen in the US and other developed countries.