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Outlook for Japan’s Real Estate Market in 2026
2026.01.01
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As social issues such as rising prices continue to draw attention, what lies ahead for Japan’s real estate market? Based on the current situation, this article examines the 2026 outlook for both the sales and rental sectors.
Growing Number of Vacant Homes Due to an Aging Population
According to the Ministry of Internal Affairs and Communications’ Housing and Land Survey released on April 30, 2024, the number of vacant homes in Japan has reached a record high of approximately 9 million units. This represents an increase of about 510,000 units since the previous survey in 2018, with the vacancy rate also hitting an all-time high of 13.8%.
Among these vacant homes, about 3.85 million are classified as “vacant houses excluding those for rent, sale, or secondary use,” meaning they are not used for leasing, selling, or as second homes. This number increased by around 370,000 units over the past five years. A significant portion of these homes are left unmanaged, contributing to what is commonly known as the vacant house problem—risks of collapse, sanitation issues, and deterioration. Vacant homes are increasing not only in rural areas but in urban regions as well.
Many members of the baby-boomer generation own their homes, and as properties are inherited by their children—many of whom live elsewhere—the lack of occupants or inability to manage these properties may lead to a rise in properties being put up for sale. With population decline and increasing vacant homes, a growing supply coupled with decreasing demand—especially outside major urban centers—could result in oversupply and falling property prices.
Source: Housing and Land Statistics Survey
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Rising Land and Housing Prices and Increasing Rental Demand
On September 16, 2025, the Ministry of Land, Infrastructure, Transport and Tourism released Japan’s Official Land Price as of July 1. Average land values—across all uses, residential land, and commercial land—rose for the fourth consecutive year, with the rate of increase widening compared to the previous year. Overall land prices increased by 1.5%.
The number of prefectures showing positive price growth in residential land increased, while those showing negative growth declined, demonstrating a nationwide upward trend in land values.
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The Tokyo metropolitan area saw a significant rise in price fluctuations. This is largely attributed to active redevelopment projects around major stations, the continued inflow of population into central Tokyo, and strong real estate investment—both domestic and international—in offices, commercial facilities, residences, and hotels.
Residential land prices in Chiyoda, Chuo, Minato, Shinjuku, and Shibuya wards increased notably, with an average growth rate exceeding 10%.
Prices for newly built properties are also rising due to higher land costs and increasing construction expenses. Recent regulations require new buildings to meet energy efficiency standards, which also affect eligibility for tax incentives such as mortgage deductions. As a result, construction costs are expected to continue climbing, leading to further increases in property prices.
Source: Standard Land Price
Trends in the Rental Market and Changes in Rent Levels
As prices for newly constructed condominiums surge, demand for pre-owned condominiums and rental housing is rising. This increased demand is influencing rental prices, which are trending upward. More property owners are raising rents during lease renewals or when signing new tenants.
However, raising rent carries risks. If negotiations during renewal fail and the tenant decides to move out, landlords face potentially costly vacancies. For example, if a landlord attempts to raise the rent by 5% but the tenant leaves, resulting in one month of vacancy, even if a new tenant is found immediately afterward, it would take at least 20 months of tenancy to recoup the one-month loss caused by the vacancy.
Raising rent must be approached carefully. Understanding the rent levels of competing properties and upgrading facilities to meet tenant expectations can help create an environment that justifies higher rent and attracts prospective tenants.
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