Japan's Urban Boom Collides with Rural Abandonment

Japan's property market is experiencing two contrasting realities: record-breaking condo prices in major cities like Tokyo and Osaka, and millions of abandoned homes in rural areas. According to official figures, Japan has nine million vacant homes, accounting for 13.8% of its housing stock.

The surge in condo prices is driven by redevelopment projects, foreign investment, labour shortages, and rising building costs. In March, land prices had risen for a fifth consecutive year, with gains widening in Tokyo and Osaka. The average price of a new condominium in Tokyo's 23 wards reached a record JPY137.84 million (USD861,000) in 2025.

Foreign investment is increasing due to the weak yen, which makes Japanese real estate more attractive to overseas investors holding stronger currencies. However, high prices are also being driven by soaring raw material and construction labour costs, as well as land price appreciation driven by redevelopments.

In contrast, rural areas are struggling with declining populations and abandoned homes. Villages continue to lose population, younger residents leave for the cities, and millions of homes have been left standing empty. The government has introduced legislation giving municipalities greater powers to identify dangerous vacant homes and order owners to repair or demolish them.

Experts believe policy could become a major risk factor for Japan's urban property boom, with potential changes in taxation, redevelopment rules, or limitations on foreign acquisitions affecting market pricing.