As the Bank of Japan's rate-hike trend continues, signs of slowing transactions in both the new-build and existing condominium markets have emerged across the Tokyo metropolitan area, while prices in central Tokyo remain elevated. Further rate hikes could have a significant impact on the market.
The Bank of Japan has shifted away from its long-standing zero- and negative-interest-rate policies and is moving toward full-fledged rate hikes. As this is increasing the burden of housing loans, the pace of condominium price growth in the Tokyo metropolitan area is beginning to slow, and the trend is said to have become more pronounced in June sales figures. Some observers believe that the market could be affected abruptly depending on whether the September Monetary Policy Meeting results in a 0.5% rate hike and on the Bank of Japan's policy direction going forward.
Prices remain prohibitively high for ordinary households. Newly built and existing condominiums in central Tokyo are priced at more than ¥100 million in the city center, with approximately ¥150 million considered a benchmark in the core central area, far exceeding the benchmark amounts based on household income. Prices in central Tokyo have also remained elevated in the existing-home market, while prices continue to rise in suburban areas, further limiting the ability to purchase. Estimates by the Real Estate Economic Research Institute also indicate that the average price of newly built for-sale condominiums will exceed ¥130 million in 2025.