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Japan Real Estate Market Outlook in 2024–2025
2025.06.16
As Japan faces the ongoing challenges of a declining birthrate and an aging population, the real estate industry is entering a critical phase of transformation. A key issue driving this change is the “2025 Problem”—a demographic shift with profound implications for housing supply, demand, and investment strategies.
In this article, we explore how this issue will shape the Japanese property market in 2024 and 2025, and what buyers, investors, landlords, and renters should consider moving forward.
What is the 2025 Problem?
The 2025 Problem refers to a range of social challenges anticipated to arise when all members of Japan’s baby boomer generation, born between 1947 and 1949, become 75 years or older. As this generation was born during Japan’s first baby boom, they make up a substantial portion of the population.
By 2025, it is projected that individuals in this age group will account for over 18% of the total population. In other words, Japan’s aging population will accelerate further, resulting in significant changes across various sectors—including real estate.
How the 2025 Problem Will Affect the Real Estate Industry
One of the key impacts of the 2025 Problem on the housing market is the accelerating pace of population aging. While aging has long been a trend in Japan, this shift doesn't necessarily introduce entirely new challenges—instead, it intensifies existing ones. Two major outcomes expected are “an increase in vacant homes” and “a shift in the balance between supply and demand.”
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Record-High Number of Vacant Properties
According to the “2023 Housing and Land Survey Preliminary Results” released by the Ministry of Internal Affairs and Communications on April 30, 2024, the number of vacant homes in Japan reached a record high of approximately 9 million units. This marks an increase of about 510,000 units compared to the previous survey in 2018, with the vacancy rate also hitting a record-high 13.8%.
Among these, around 385 million units are classified as “vacant homes excluding those for rent, sale, or seasonal use,” indicating that they are not actively being used. This number has grown by about 370,000 units in just five years. Many of these properties are unmanaged and left abandoned, increasing concerns about structural deterioration and hygiene problems—commonly referred to as the “vacant house problem.”
Since many baby boomers’ own homes, properties inherited by their children may not be lived in or maintained, especially if located far away. This situation could lead to a surge in properties being put up for sale. Furthermore, with inheritance registration becoming mandatory as of April 2024, market activity in this area is likely to increase.
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Falling Prices for Secondhand Homes, Soaring Prices for New Builds
With a declining population and growing number of vacant homes, housing supply is increasing while demand is decreasing. In particular, outside of urban areas, an oversupply of properties is expected to lead to price drops.
Conversely, prices for new construction have already begun to rise. This is due to increasing land prices, higher construction costs, and growing demand for convenient urban locations such as Tokyo. Additionally, newly built homes are now required to meet energy efficiency standards, which are also tied to eligibility for tax incentives such as mortgage deductions. These factors contribute to rising construction costs moving forward.
Rental Demand Rising, with Increased Focus on Vacancy Solutions Outside Urban Areas
As new housing becomes more expensive, demand for rental properties—especially for couples and families—is growing. However, in an aging society, it is crucial to adapt to changing lifestyles and consumer needs. To address vacancies, landlords and property managers may consider strategies such as renovating units to accommodate remote work, partnering with rent guarantee companies to accept elderly tenants or foreign residents.
In regions with shrinking populations and declining housing demand, proactive vacancy countermeasures will be more essential than ever.
This shifting landscape presents both challenges and opportunities for the real estate industry. Staying informed and flexible in response to demographic trends will be key to long-term success.
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