In the course of consulting with our clients on various real estate matters, we have frequently heard, especially in the past few years, that the prices of newly built condominiums have risen so high that it is difficult to afford them. In fact, various data show that the price of new condominiums continues to rise, while the number of units supplied is on the decline. This situation must be a major concern for many people looking for a home.
However, we believe that there is no need to be pessimistic about these market changes. Rather, we believe that this is an excellent opportunity for those who have been bound by the stereotype that "when it comes to looking for a home, the first step is to build a new home" to look at options that are more diverse and better suited to their lifestyles and values.
At the center of this is the option of a pre-owned condominium. The decline in the supply of new condominiums has resulted in a revitalization of the used condominium market and has provided an opportunity for quality properties to be distributed in the market. In addition, people who are not satisfied with the standardized floor plans of new buildings are increasingly interested in purchasing an existing property and "renovating" it to create their own ideal space.
This article will provide an easy-to-understand explanation of the structural factors behind why the supply of new condominiums is declining and prices are soaring. We will also analyze the impact of these factors on the used condominium market, and propose specific checkpoints to help you realize "wise housing selection" in the coming era, while incorporating our professional knowledge. We hope this will help you in your search for a home.
There is no single reason behind the declining supply of new condominiums and skyrocketing prices, but rather a complex interplay of multiple factors. Here, we will discuss three of the most influential factors with data.
The first and most significant factor is rising construction costs. The sales price of a condominium consists largely of "land acquisition costs" and "building construction costs," but in recent years, these construction costs have soared significantly.
This is due to the global rise in the price of materials, which is still fresh in our minds due to the "wood shock" that began around 2021, the "iron shock" of rising steel frame and rebar prices, and the rise in energy prices due to the protracted situation in Russia and the Ukraine. Rising energy prices and other factors are pushing up the prices of all building materials.
Even more serious is the labor shortage and rising labor costs in the construction industry. Due to the declining birthrate and aging population, the number of skilled workers at construction sites is decreasing year by year, making it extremely difficult to secure craftsmen, especially those with specialized skills. According to a survey by the Ministry of Land, Infrastructure, Transport and Tourism, unit labor costs for public works have continued to rise year after year, and by March 2025, the national average for all occupations had increased by 6% over the previous year. This is directly reflected in the construction cost of condominiums and is a major factor driving up sales prices.
| Item | Contents | Impact |
|---|---|---|
| Soaring material prices | Wood shock, iron shock, higher energy prices | Rise in overall construction costs |
| Rising labor costs | Shortage of skilled construction workers, aging workforce, difficulty in securing specialized craftsmen | Significant increase in labor costs |
| 2024 problem | Overtime caps imposed by the Workplace Reform Act | Longer construction period and further increase in labor costs |
Secondly, land suitable for condominium development is becoming increasingly difficult to acquire, especially in central Tokyo. In highly convenient areas, demand for housing remains strong, and competition among developers to acquire land for condominium development is intensifying. Competition with other uses, such as hotels and office buildings, is also intense, and land purchase prices remain high.
In addition, the hurdle to securing a large amount of land is extremely high because it takes a great deal of time and effort to adjust the rights of a large number of landowners. As a result, developers are forced to set sales prices high in order to secure maximum profit from limited land. 3.
Against this backdrop of rising costs and difficulties in acquiring land, the supply strategy of real estate developers is also changing. They have shifted from a business model of supplying and selling large numbers of units, as in the past, to one of increasing the added value per unit and focusing on high-priced properties targeting wealthy individuals and power couples.
This is an indication of management's decision to avoid the risk of selling a large number of units at once and to ensure a profit even with a small number of units. As a result, the total number of condominiums supplied to the market has decreased, pushing up the average price.
In fact, data released by the Real Estate Economic Institute shows that while the number of newly built condominiums on the market in the Tokyo metropolitan area is on a downward trend, the average price continues to rise.
Reference: Market Trends of New Condominiums for Sale in the Tokyo Metropolitan Area
| Period | Condominiums on Sale | Average price | Unit Price per Square Meter |
|---|---|---|---|
| August 2025 | 1,301 units | 103,260,000 yen | 158.8 million yen |
| Compared to the same month last year | 78.7% Year on year | +8.3 | +8.2 |
Thus, a combination of factors, including rising costs for materials and labor, difficulties in acquiring land, and a shift in developers' strategies, are contributing to the current situation of a declining supply of new condominiums and soaring prices.
Changes in the new condominium market have a direct impact on the existing condominium market, which is the counterpart of the new condominium market. The structure of the market itself is changing, as people who had previously considered new construction as their main option begin to look to the used condominium market. Here we will discuss three typical impacts.
The most notable impact is the increase in prices and demand for pre-owned condominiums. As prices of new condominiums have skyrocketed, people who are no longer able to afford a property in their desired area and size are beginning to consider used condominiums as a realistic option. This shift in demand is a major factor pushing up prices in the overall used condominium market.
According to August 2025 data released by the Real Estate Information Network for East Japan (East Japan Rains), the unit price per square meter of pre-owned condominium contracts in the Tokyo metropolitan area has exceeded that of the same month last year for an astonishing 64 consecutive months. The number of contracts also increased significantly, up 54.5% from the same month last year, indicating that the market is booming.
Reference】Overview of the Used Condominium Market in the Tokyo Metropolitan Area (August 2025)
| Item | Contracts | Year-on-year change |
|---|---|---|
| Number of contracts | Number of contracts | +Contracts |
| Contracts per square meter | 84.85 million yen/m2 | +13.5 |
| Contracted price | 52,790,000 yen | +13.5 |
In particular, buyers are concentrating on properties with so-called "favorable conditions" such as close proximity to train stations, young age, and good management conditions, and it is not uncommon to see properties selling for the same or even higher prices than when newly built. We expect this trend to continue in the future. 2.
The next trend that deserves attention is the generalization of the purchase of existing properties for "renovation. Those who are not satisfied with the standardized floor plans and interiors of new buildings, or who are looking for a more personalized living space, are finding value in "renovation," which involves the purchase of an existing condominium and extensive renovations.
Renovation offers the following advantages
With new construction costs skyrocketing, comparing "buying a new building" with "buying an existing building in a good location and renovating it" on the same budget, the latter is more likely to create a more spacious and ideal home. Against this backdrop, renovation-related markets are likely to expand further in the future. 3.
In the past, Japan had a strong belief that the value of a building decreases with its age, and there was a "myth of new construction" that new buildings had the highest asset value. However, as the supply of new buildings declines and the used market becomes more active, this standard of value is changing dramatically.
Nowadays, simply being new is not enough to guarantee asset value, and the intrinsic value of the property, or "location," is becoming more important. This is because factors such as convenience of transportation, the quality of nearby facilities, and the brand image of the area have universal value that is not easily affected by economic fluctuations or changes in the market.
Used condominiums that are well managed and in excellent locations are unlikely to decline in value as they age, and in fact may even increase in value as a result of redevelopment of the surrounding area. This is an indication that the concept of real estate as a long-term "asset" rather than an object of "consumption" has become widespread. The ability to correctly assess the potential of a property, beyond the framework of new or used, is indispensable in selecting real estate in the future.
With the used condominium market becoming more and more active, it is not easy to find the best one for yourself from among the many properties available. The key to avoiding regrets is not to blindly search for a property, but to have clear criteria in mind. Here are five checkpoints from a professional point of view that we always tell our clients.
It is no exaggeration to say that the value of real estate is "determined by location. Location is the most important criterion in determining whether property values are likely to be maintained and improved in the future. Specifically, the following points should be evaluated comprehensively.
As the saying goes, "Buy the management of the condominium." Good or bad management has an extremely large impact on the longevity of the building, comfort of living, and future asset value. No matter how good the location is, you should avoid properties with sloppy management. When considering the purchase of a property, be sure to look over the following documents to ensure that the management association is functioning properly.
Although age is a major factor influencing price, it is too early to simply judge newer buildings as better and older buildings as worse. It is important to correctly understand the advantages and disadvantages of different building ages and compare them to your budget and life plan. In particular, be sure to check the earthquake resistance standards that guarantee the structural safety of the building; one rule of thumb is that the building must meet the "New Earthquake Resistance Standards," which apply to buildings that received building permits on or after June 1, 1981.
Comparison of advantages and disadvantages by building age
| Age Range | Advantages | Demerit |
|---|---|---|
| Less than 5 years old | Clean and latest facilities like a new building Less worry about repairs in the foreseeable future |
High price Price decline rate from new construction is large |
| 6 to 15 years old | Prices are relatively reasonable. Design and facilities are not too old. The first large-scale repair may have been completed. |
・Facilities may be close to replacement time. ・Fund for repair may increase. |
| 16 to 30 years old | The price becomes affordable. ・It is suitable as a base for renovation. Properties in good management condition are good targets. |
・Multiple large-scale repairs will be required. ・Need to pay attention to deterioration of invisible parts such as plumbing |
| Over 31 years old | Very inexpensive There is a possibility of finding a good bargain in a good location. |
Be careful about earthquake resistance (possibility of old earthquake resistance standards) Mortgage deduction may not be available. Renovation costs may be high. 4. |
It is important to consider not only whether the floor plan fits the current family structure and lifestyle, but also whether it is flexible enough to accommodate future changes. For example, check to see if it is possible to divide rooms as children grow or to secure space for working from home in the future.
If you are considering renovations, you should also pay attention to structural constraints. In particular, condominiums with a "wall structure," in which the building is supported by walls, often do not allow the removal of interior walls, placing significant restrictions on floor plan changes. On the other hand, "rigid-frame structures," which are supported by pillars and beams, allow relatively free floor plan changes. Confirm the structural type with the real estate agent when you visit the house.
Finally, the most important thing is a reasonable financial plan. Do not just focus on the price of the property, but consider the "total amount," which includes various expenses (brokerage fees, registration fees, real estate acquisition tax, etc.) that will be incurred at the time of purchase, as well as the cost of renovations if any. Generally speaking, the total cost should be approximately 6-9% of the property price.
In addition, when using a mortgage loan, it is essential to confirm in advance whether a loan can be obtained for the desired property and how much can be borrowed, since different financial institutions have different evaluations of the age of the building and the structure of the building. We recommend that you consult with several financial institutions to obtain the most favorable terms for you. If you consult with a real estate professional like us, we can provide you with total support, including financial planning and introductions to financial institutions.
In this article, we have explained the background of the declining supply of new condominiums and soaring prices, the impact of this on the used condominium market, and specific checkpoints for choosing a smart used condominium.
We believe that structural problems in construction costs, such as rising material and labor costs, will not be solved overnight, and that the price of new condominiums is likely to remain high or continue to rise moderately in the future. Under these circumstances, a more strategic perspective is required than ever before in order to realize the ideal home.
By turning our attention to the second-hand market rather than sticking solely to the option of new construction, we can open up new possibilities for acquiring properties in better locations, at more affordable prices, and renovating them freely to suit our own lifestyles. This means creating a home that is an "asset" of your own, rather than choosing a house as a uniform "commodity.
Of course, there are some unique difficulties with used condominiums, such as the fact that the condition of each property differs greatly from one to another. That is why it is essential to obtain knowledge from reliable sources and develop an "eye" to determine the essential value of the property, such as its location and management status.
At INA & Associates, our professionals have a wealth of experience and expertise to help you make the best real estate decision for your situation. INA&Associates, Inc. provides support to help you choose the best real estate for your individual situation, starting with financial planning. If you have any questions or concerns about real estate, please do not hesitate to contact us.
A1: Since real estate prices are affected by various economic conditions, it is difficult to assert "when is the absolute best time to buy". However, in the current situation where demand is shifting to the used market, properties in good condition will sell quickly. Rather than being sad or happy about price fluctuations, the "time to buy" for you is when your life plans (marriage, childbirth, relocation, etc.) and financial plans are in place. It is important to find a reliable partner and be ready to take advantage of the opportunity, always keeping an eye on market trends.
A2. Even if a property is older, it does not necessarily mean that it is a bad property. What is important is whether it was built under the "new earthquake-proof standard" after June 1981 and whether it is well managed. In particular, condominiums with a well-developed long-term repair plan and ample repair reserve funds tend to maintain their asset value even if they are older. In fact, for the same budget, you can choose a property in a much better location than a new building, which is a great advantage. The interior can be renewed through renovation, so focus on checking the building's structure and management status.
A3. Renovation costs vary greatly depending on the scale of construction and the grade of interior materials, but generally speaking, the standard cost is 100,000-200,000 yen per square meter. For example, if a 70 m2 condominium is to be completely renovated, you should expect to pay between 7 and 14 million yen. However, this is only a guide, and the cost will rise or fall depending on the scale of the floor plan changes and the grade of equipment. It is important to obtain quotes from multiple renovation companies to find a plan that fits your needs and budget.
A4. There are several common characteristics of used condominiums that maintain their asset value and prevent price declines.
Properties that meet several of these conditions are less susceptible to economic conditions and will be more advantageous when selling or renting in the future.