The average price of used condominiums in Tokyo's 23 wards dropped by 0.8% in June to ¥127.41 million ($781,000), marking the first monthly decline in 26 months, according to Tokyo Kantei Co. This fall suggests that the market may be correcting after a prolonged boom, influenced by rising interest rates and inflation burdening consumers. Despite the recent dip, the June figure remained the second-highest on record, and prices were still up 23.3% year-on-year.
The decline was most pronounced in the six central wards (Chiyoda, Chuo, Minato, Shinjuku, Bunkyo, and Shibuya), where average asking prices fell 1.3% to ¥185.12 million per 70 square meters. This marked the second consecutive month of decline for these central areas. The "price revision share," indicating properties with lowered asking prices, reached 50.9% in central Tokyo, a level not seen since December 2008, suggesting a significant softening of the market in these prime locations.
Masayuki Takahashi, a senior chief researcher at Tokyo Kantei, noted that the market is beginning to soften and correct after a price surge driven by investment. He suggested that high prices have made condominiums unaffordable even for owner-occupiers relying on dual-income mortgages and less attractive to investors due to a shortage of buyers. Investor demand has weakened due to rising interest rates making rental investments less appealing and slower price growth reducing opportunities for quick resales.
However, the slowdown is not uniform across Tokyo. In areas like Shinagawa, Meguro, Setagaya, and Suginami, average asking prices increased by 1.1% to ¥107.94 million, while northern and eastern wards saw a 0.5% rise to ¥83.38 million. These areas, driven more by owner-occupier demand, are seeing support as buyers shift their focus from the increasingly unaffordable central areas. This indicates a correction in the most expensive parts of the city rather than a broad market collapse, with central Tokyo sellers being forced to adopt more realistic pricing strategies.
