Economy New condos in Japan soar to 10 times average annual salary

[thomas]

Tokyo Kantei, a real estate market research firm, reports that new condominium prices in Japan have surged to more than ten times the average annual salary. This significant price increase, coupled with stagnant wages, has prompted developers to focus on the luxury market. Foreign buyers, particularly those from countries with strong currencies, also contribute to rising prices. The weak yen makes Japanese properties relatively affordable for overseas investors, fueling demand and driving up costs.

Masayuki Takahashi, a senior researcher at Tokyo Kantei, highlighted the widening gap between income growth and condominium price increases. While traditionally seen in metropolitan areas like Tokyo, this trend spreads to regional areas, focusing on properties targeting affluent buyers. The high price-to-income ratio underscores Japan's growing affordability crisis. Years of wage stagnation and recent inflationary pressures have significantly strained households, making it increasingly challenging to afford housing.

The high price-to-income ratio is the latest indication that affordability is a pressing issue in Japan after years of wage stagnation and the sudden emergence of inflation, with households squeezed and struggling to make ends meet. Tokyo Kantei's study covers the selling price of 70-square-meter manshon — the Japanese word for high-rise condominiums — in 2023. The average price nationwide was ¥45.5 million ($298,000), while the average annual income was ¥4.51 million, for a ratio of 10.09, up from the previous year's 9.66. Because of the rising labor, land and raw material costs, even condominiums aimed at general consumers can be pricey, so developers are increasingly shifting their focus to the rich, who are still willing to shoulder these escalating costs, Takahashi added.

Tokyo had the highest price-to-income ratio for new condominiums at a staggering 17.78 times, with an average price of ¥105 million. Nagano Prefecture followed closely with a ratio of 15.88 times, primarily due to the high cost of properties in the exclusive resort town of Karuizawa. Kyoto came in third with a ratio of 14.38 times. In contrast, Yamaguchi Prefecture had the lowest ratio at 6.46 times, with an average condo price of ¥29.9 million. Kagawa and Yamanashi Prefectures followed with ratios of 6.79 and 7.43 times, respectively.

New Japanese condos now cost 10 times average salary, study shows

Wages are not keeping up with rising costs, resulting in developers focusing on the higher end of the market.

www.japantimes.co.jp

 

[Lothor]

This is bad news. London faced and still faces this problem. Rapid price increases have a ripple effect throughout the housing market. Rents adjust accordingly, and then the prices of goods rise because businesses have increased overheads. The rich really do **** things up for the rest of us.

 

[Grandpa Frank]

With the average house here in Maine now a half a million dollars or more and apartments around $1500 US a month , it's killing our economy. We have had many long time businesses close because they could not get any help. To stay open , a business has to jack up their prices and then few can afford the basic things needed to live. The lack of affordable housing sure has a ripple effect here. I notice Japan & Maine have a lot in common , like an aging population and economic problems.

 

[Petaris]

It's pretty bad here in Chicago as well. The housing prices, rent, and cost of living have all gone up while salaries really have not. Almost all new construction or remodeling/rehabbing are luxury. Built as cheaply as possible but given a huge markup, far over their real value because of "market pricing". I really don't understand how anyone is affording to buy them.