Newly built apartment in Japan 60% price increase compared to last year How high will Japanese real

The average price of newly built condominiums in Tokyo's 23 wards during the period from January to June 2023 was announced by the Real Estate Economic Institute

It reached approximately 129.62 million yen, which is about 60% higher compared to the same period in the previous year, surpassing 100 million yen for the first time since 1973. The increase in construction costs and labor shortages have been influencing factors. Similarly, in the Tokyo metropolitan area (Tokyo, Kanagawa, Saitama, and Chiba prefectures), the average price was 88.73 million yen, 1.4 times higher than the previous year, marking a new record surpassing 2020. The surrounding areas of Tokyo, such as those below Tokyo and Kanagawa prefectures, also experienced price increases.

The main factors contributing to the average price increase of these newly built condominiums are as follows:

1. Material cost surge: In recent years, the prices of materials used in construction have been rising. This is due to changes in the balance of demand and supply of raw materials, as well as international economic conditions and natural disasters, which have an impact. The high material costs push up construction expenses, leading to an increase in property prices.

2. Labor shortage: The construction and real estate industries are facing a serious labor shortage. With the increase in technically advanced construction projects, there is a lack of skilled labor, which contributes to the rise in prices. The increase in labor costs also affects the pricing of condominiums.

3.High material costs: The prices of materials used in construction have been rising in recent years. This is attributed to fluctuations in the supply and demand of raw materials, influenced by international economic situations and natural disasters. The high material costs result in increased construction expenses, which in turn are reflected in the property prices.

4. Labor shortage: The construction and real estate industries are facing a serious labor shortage. As technically advanced construction projects increase, the availability of skilled labor falls short, leading to price increases. The rising labor costs also contribute to the rise in condominium prices.

5.Increasing land prices: In the Tokyo 23 wards and the metropolitan area, land supply is limited, unable to keep up with the growing demand. This leads to a surge in land prices, which in turn escalates the land costs for developing new condominiums. High land costs are a significant factor affecting condominium prices.

6.High housing demand: The increasing urban population and the rise in single-person households due to aging contribute to the surge in housing demand. With demand surpassing supply, fierce competition in the market drives up prices.

Considering these factors, it can be understood that the average price of newly built condominiums rose during the period from January to June 2023. It's worth noting that compared to major cities worldwide, Japanese real estate is still relatively affordable. Given the continuous increase in foreign investors, there is a possibility of further price escalation in the future.