September 18, 2025
TOKYO – Soaring benchmark land prices in urban areas in 2025 have prompted those who had given up on buying homes in the Tokyo metropolitan area to consider neighboring prefectures instead.
According to the Land, Infrastructure, Transport and Tourism Ministry’s 2025 benchmark land prices, residential land prices increased by 1% nationwide, marking the highest growth in 34 years.
This surge is particularly noticeable in major urban centers, where housing prices are also skyrocketing, and the resulting population shift is now pushing up land values in the suburbs.
Condos topping ¥100 mil.
A 39-year-old male company employee, who lives in a condominium he bought in Tokyo’s Shinagawa Ward in 2019, is looking for a larger place nearby, as he has two growing children.
However, as properties are more expensive than he anticipated, he is also considering buying a single-family home near his parents in Yokohama.
He plans to make a decision by the end of this year.
“I don’t think the prices will go down, even if I wait a few years,” he said. “I have no choice but to decide now.”
Residential land prices in Tokyo’s 23 wards surged by 8.3%, the largest increase among all prefectural capitals. Combined with soaring construction costs, this continues to drive up housing prices.
According to the Real Estate Economic Institute Co., the average price of a new condominium in Tokyo’s 23 wards was ¥130.64 million for the first half of 2025, a 20.4% jump from the same period last year, marking the third straight year that the average price has topped ¥100 million.
Demand exceeds expectations
Younger people, who are generally first-time homebuyers, are becoming more interested in purchasing properties in the suburbs, which tend to be more affordable.
At Sumitomo Realty & Development Co.’s new condominium complex, which was completed in May and is in Soka, Saitama Prefecture, nearly every weekend is booked with appointments to view model rooms.
With prices averaging about ¥50 million, most of the properties are being purchased by young parents in their 30s.
According to the firm, some of the selling points include spaciousness, a less than one hour commute to Tokyo Station and a good environment for raising children.
“I didn’t think young people would be interested in buying [the condominiums] because of the surge in housing prices, but demand is higher than I expected,” said a sales representative from the firm.
Land prices near the condominium increased 6.7%, significantly outpacing the 1.5% increase for Saitama Prefecture as a whole.
Tsukuba, Ibaraki Prefecture, and Nagareyama, Chiba Prefecture, are both highly regarded for their convenience and favorable child-rearing environments. An area in Tsukuba has the fifth highest increase in land prices nationwide at 19.6%, and an area in Nagareyama has the 10th highest at 17.9%.
Investment purposes
It is believed that the surge in land and housing prices is driven not only by economic recovery, but also by an increasing number of investment-focused purchases by wealthy domestic and foreign buyers.
A survey by Mitsubishi UFJ Trust and Banking Corp. found that foreign buyers accounted for 20%-40% of all condominiums purchased in Tokyo’s Chiyoda, Minato and Shibuya wards during the second half of 2024.
The weak yen is making Japanese real estate appear more affordable compared to overseas markets.
The Land, Infrastructure, Transport and Tourism Ministry is also surveying the actual state of real estate transactions.
In July, Tokyo’s Chiyoda Ward requested industry associations, including major real estate companies, to restrict condominium transactions for investment purposes.
The surge in housing prices became a point of contention in the House of Councillors election in July, and if the trend continues, the government may face pressure to intervene.
Meanwhile, the continued increase in mortgage rates, fueled by the Bank of Japan’s policy of interest rate hikes, could reduce housing demand, even in robust urban markets.
The growth rate for regional areas remained at 0.4%, unchanged from the previous year.
While residential land prices in other regional areas, excluding the cities of Sapporo, Sendai, Hiroshima and Fukuoka, remained flat after 30 years of decline, a prefecture-by-prefecture analysis revealed that prices increased in 20 prefectures, decreased in 26 and remained unchanged in one.
“With rising construction costs and solid demand from dual-income households, real estate prices in urban areas will likely continue to rise for the time being, widening the disparity between cities and suburbs,” said Yoshikazu Funakubo, a senior researcher at Mitsubishi UFJ Trust and Banking.
AloJapan.com