Tokyo-area new housing prices continued to rise, with May average prices up 13.5% year-on-year, marking the third-highest level on record. Despite three consecutive years of significant wage increases, salary growth still lags behind rising home prices.
TOKYO, JAPAN (MERXWIRE) – Japan’s private research firm Real Estate Economic Institute has released its latest report on the condominium market in the Tokyo metropolitan area, showing continued growth in both supply and prices across Tokyo, Kanagawa, Saitama, and Chiba prefectures.
According to the report, 1,447 newly built condominiums were supplied in May 2026, representing a 12.3% increase from the same month last year and marking the second consecutive month of growth. The largest increases in supply were recorded in Tokyo’s 23 wards and Chiba Prefecture.
The average selling price of a newly built condominium in the metropolitan area reached ¥106.6 million in May, up 13.5% year-on-year and the third-highest level on record. Meanwhile, the average price per square meter rose 11.4% to ¥1.563 million, extending its upward trend for a 13th consecutive month.
Market demand also remained solid. The initial contract rate for newly launched units reached 64.9% in May, up 7 percentage points from a year earlier and 2.6 percentage points from the previous month. High-rise condominiums with 20 floors or more performed particularly well, with 435 units released and a contract rate of 80.7%, significantly exceeding the market average.
By region, Tokyo’s 23 wards accounted for 551 units, representing 38.1% of total supply and ranking first among all areas. Chiba Prefecture followed with 360 units (24.9%), while Kanagawa Prefecture supplied 284 units (19.6%). Overall, Tokyo accounted for 48.3% of total supply, highlighting the market’s concentration in the capital region.
As of the end of May, the inventory of unsold new condominiums in the metropolitan area declined to 6,270 units, down 43 units from the previous month and marking the fifth consecutive monthly decline. The data suggests that demand remains stable and the market continues to absorb new supply at a steady pace.
The Real Estate Economic Institute forecasts that approximately 1,500 new condominium units will be supplied in the Tokyo metropolitan area in June 2026. However, housing prices are expected to remain elevated due to rising land, construction material, and labor costs.
While housing prices continue to surge, wage growth among Japanese workers has failed to keep pace.
According to the Japan Business Federation (Keidanren), the average wage increase agreed upon during the 2026 spring labor negotiations reached 5.46%, equivalent to an average monthly increase of ¥19,964. This marks the third consecutive year in which wage hikes exceeded 5% and represents the largest increase since comparable records began in 1976.
However, compared with double-digit growth in housing prices, wage gains remain relatively modest. Although Japan appears to be entering a rare cycle of sustained wage growth, real home-buying affordability has not improved accordingly.
Market analysts note that Japan is increasingly experiencing a “two-speed economy.” Corporate profits are driving salary increases, while asset prices—particularly real estate—continue to rise due to higher costs and favorable investment conditions.
As a result, even record wage increases have been insufficient to offset the rapid rise in housing prices, creating a situation in which nominal incomes are increasing while homeownership becomes less affordable.
A Tokyo office worker in his 30s said rising housing costs have forced him to reconsider his homeownership plans.
“I can definitely feel the impact of the pay raise, but housing prices are on a completely different level,” he said. “A two-bedroom apartment in Tokyo now often costs close to ¥100 million. It’s difficult to make a purchase decision, so I’m considering waiting or looking at suburban areas instead.”
Another resident living in Tokyo’s Chuo Ward said both asset values and living costs are rising simultaneously.
“Higher property prices have increased the value of owned assets, but everyday expenses are also becoming more expensive,” the resident said. “For homeowners, there is a wealth effect. For those who have not entered the market yet, the barrier to homeownership keeps getting higher.”
Overall, the Tokyo metropolitan housing market appears to be entering a new era of persistently high prices. Despite historic wage increases, affordability pressures continue to intensify.
With housing demand concentrated in central Tokyo and construction costs remaining elevated, the structural gap between wage growth and housing price inflation is expected to widen further in the near term.
