Supply shortage and soaring construction costs drive Tokyo apartment prices to record highs.

Rising construction costs, limited supply, and more high-end luxury apartments entering the market have driven apartment prices in Tokyo to reach a historic high in 2025. Data released by the Real Estate Economic Research Institute shows that the average price of new condominiums in Tokyo and the surrounding areas has increased by 17% to 91.8 million Japanese yen. Meanwhile, the average price of new apartments in the city center has risen by approximately 22% to 136 million Japanese yen throughout the year. Previously, after five consecutive years of increase, housing prices saw a slight decline in 2024. The weakening yen has pushed up the cost of imported raw materials, and the shortage of labor has exacerbated construction expenses, keeping Tokyo housing prices on an upward trend. The report indicates that the supply of new apartments in the Tokyo metropolitan area has decreased by 4.5% to its lowest level in over 50 years, further intensifying the price pressure in the high-end market. The interest rate hike by the Bank of Japan has limited impact on cooling down housing prices. The overheated market has sparked concerns about housing affordability and speculation by foreign buyers.