In February 2025, the Greater Tokyo used condominium market reached a major turning point. The number of completed transactions surged +23.9% year-on-year, exceeding 4,000 transactions in a single month for the first time in approximately four years, while prices remain at historically high levels. This article provides a multi-faceted analysis of the supply-demand fluctuations brought about by the shift in interest rate policy, temperature differences between regions, and the correlation with the office market and redevelopment projects.
Why Did Completed Transactions Surge in February 2025? The Reality of Market Momentum Driven by Interest Rate Hikes
In conclusion, the Bank of Japan's decision to raise interest rates further prompted action from both sellers and buyers, leading to a surge in completed transactions. The direct trigger was the policy rate hike at the end of January 2025 (from 0.25% to 0.5%).
In February 2025, the number of used condominium transactions completed in the Greater Tokyo area (Tokyo, Kanagawa, Chiba, and Saitama prefectures) surged +23.9% year-on-year, reaching a level exceeding 4,000 transactions per month for the first time in approximately four years. This is the highest level since March 2021 (4,228 transactions), the peak period after the COVID-19 pandemic, and it also surpassed the previous peak of 3,810 transactions in March of last year. Completed transactions have exceeded the previous year's figures for four consecutive months, and market momentum is unmistakably clear.
With variable interest rate hikes from April onward seen as a certainty, buyers rushed to purchase early to avoid future increases in loan burdens, while sellers also came to market wanting to sell at high prices while interest rates were still low. This last-minute rush driven by interest rate factors extended not only to used condominiums but also to used detached houses, with the number of completed detached house transactions in February recording a substantial year-on-year increase of +44.8%.
On the price front, the transaction price per square meter was up +4.8% year-on-year for the Greater Tokyo average, marking 58 consecutive months of year-on-year increases since May 2020. The average transaction price per unit (across the Greater Tokyo area) also rose +2.6% year-on-year, marking three consecutive months of year-on-year increases. The reason the price increase rate is smaller than the per-unit price increase is that the average exclusive floor area shrank -2.1% year-on-year, suggesting that more buyers are choosing smaller units to fit their budgets.
As of January 2025, the transaction price per square meter for the entire Greater Tokyo area (approximately 819,000 yen/m²) had already exceeded the level in November 1990 during the bubble era (approximately 801,000 yen/m²), highlighting the prolonged price surge. February maintained this high price trend, although the transaction price per square meter experienced a slight correction compared to the previous month. According to East Japan Real Estate Information Network (REINZ) data broken down into 18 districts, the transaction price per square meter decreased month-on-month in 14 of the 18 districts in February, suggesting that the monthly gains that had continued for the past six months or so took a brief pause in many areas.
Why Does the Shortage of Used Condominium Inventory Continue? Structural Problems on the Supply Side
In conclusion, owners have continued to hold back from selling for an extended period, with the number of new listings falling below the previous year's level for 11 consecutive months. The number of units in inventory has also been below the previous year for 9 consecutive months, and supply-demand conditions remain tight.
While demand has swelled, supply-side indicators continue to lag. The number of new listings (newly registered properties for sale) has continued to decline year-on-year, standing at 11 consecutive months of negative growth (down 6.5% year-on-year) as of January 2025. The background to this is the trend of withholding sales that had continued during the recent period of price surges. Many owners deferred selling, citing reasons such as "the replacement property after selling would be overpriced" and "I don't want to give up my current low-interest mortgage," causing new listings to thin out.
As a result, the number of units in inventory (the total number of used condominiums on the market) has also continued to decline, with 9 consecutive months of year-on-year declines (down 4.2% year-on-year) as of January. Buyers continue to face a situation with limited choices, and this supply constraint is also one of the factors supporting prices.
However, in February, some sellers went ahead with selling before interest rates rose, so the decline in new listings may have narrowed slightly. The fundamental supply shortage will not be resolved quickly, however. As long as the overall inventory level in the market remains low, the situation where "properties sell immediately once listed" will continue, and the importance of stress-free rental management is also increasing.
How Do Used Condominium Market Conditions Differ Between Central Tokyo and the Suburbs?
In conclusion, while the three central wards (Chiyoda, Chuo, and Minato) are seeing sluggish growth in completed transactions due to price surges that limit the buyer pool, suburban areas are seeing a significant increase in transaction volume.
Looking at used condominium market conditions by region, temperature differences emerge between areas even within Greater Tokyo. The average price in Tokyo's 23 wards (approximately 62.9 million yen) reaches three times the average price in Chiba Prefecture's other regions (approximately 20.61 million yen), indicating a large price gap between central and suburban areas.
While prices in central Tokyo have continued to rise, there are indications that the three core wards in particular, where high-priced properties are concentrated, have continued to see year-on-year declines in transactions. Because property prices in core central areas have risen so much, the buyer pool has narrowed to wealthy individuals and some investors, and the growth in transaction numbers has begun to plateau. Average prices in the 23 wards of Tokyo have continued to rise at a pace of more than 2% per month since the second half of 2024, with prices increasing more than 15% in just the past six months as of February 2025.
Foreign investor purchases driven by yen depreciation are also notable in central areas. Over the past five years, the Chinese yuan has risen approximately 35% and the Singapore dollar approximately 30% against the yen, making Tokyo real estate increasingly attractive to foreigners. The impact of foreign investors on the Tokyo real estate market warrants close attention.
On the other hand, Saitama Prefecture, centered on Saitama City, has seen robust transaction volumes, and demand recovery in suburban bedroom communities is clear. Chiba Prefecture has also been performing strongly, with completed transactions exceeding the previous year's levels for 16 consecutive months since November 2023. Urban areas in Kanagawa such as Yokohama and Kawasaki maintained year-on-year increases of several percent in transaction price per square meter, with both transaction volumes and prices remaining firm. In general, the picture as of February is: "Central areas maintain high prices but sluggish transaction growth, while suburbs see active transactions but flat-to-slightly-declining prices."
How Do Office Market Conditions and Redevelopment Affect the Used Condominium Market?
In conclusion, a large supply of central Tokyo office buildings and the successive cancellation of redevelopment plans are contributing to structural changes in the overall real estate market that may also ripple through to the residential market.
As of February 2025, the large-building vacancy rate in the five central Tokyo wards (Chiyoda, Chuo, Minato, Shinjuku, and Shibuya) was 3.58%, up +0.22 percentage points from the previous month. Over the medium to long term, there are concerns that the large supply around 2025 could push the vacancy rate up to the upper 6% range.
Signs of change are also emerging in urban redevelopment trends. The Nakano Sunplaza redevelopment plan was effectively shelved in March 2025 due to surging project costs (approximately twice the original plan). The TOC Building rebuilding plan in Gotanda has also stalled due to soaring construction costs.
However, the successive cancellation of redevelopment projects itself plays a role in supply adjustment. The movement to convert surplus offices to residential or other uses may also begin to gain serious momentum. Looking at the future direction of urban restructuring and building supply-demand balance, the keyword appears to be a shift from "new construction bias to utilizing existing stock." Attention is also growing toward the future of building maintenance utilizing AI and IoT.
What Are the Key Points Investors and Potential Buyers Need to Know Right Now?
In conclusion, with the addition of the new variable of rising interest rates, identifying area characteristics and appropriate pricing has become more important than ever.
The Greater Tokyo used condominium market moved significantly in February 2025, triggered by changes in interest rate policy. Looking at it by region, central areas show signs of sluggish transaction volume growth, while suburban areas are supported by robust demand. If you prioritize stable asset value, properties that are centrally located, near stations, and of high quality remain strong, but if you are targeting price appreciation potential or yield, looking toward suburban areas likely to grow in the future is also worth considering.
As mortgage rates rise, buyers' budgets will be squeezed, but this will also create more room for price negotiation. For prospective buyers, it is essential to keep a close eye on surrounding market prices and future interest rate trends, and to develop the ability to determine whether a price is appropriate. The Greater Tokyo real estate market still has high long-term potential.
Frequently Asked Questions (FAQ)
By how much did completed used condominium transactions in Greater Tokyo increase in February 2025?
They surged +23.9% year-on-year, reaching a level of over 4,000 transactions per month for the first time in approximately four years. The main factor was last-minute demand triggered by the Bank of Japan's decision to raise interest rates further.
How do used condominium prices compare with the bubble era?
As of January 2025, the transaction price per square meter for the entire Greater Tokyo area (approximately 819,000 yen/m²) had exceeded the level at the peak of the bubble era in November 1990 (approximately 801,000 yen/m²). February also maintained the same high price range.
What will happen to used condominium prices in the future?
While buyers' budgets will be constrained as interest rate hikes gain momentum, a sharp price decline is difficult to envision as long as inventory shortages continue. A bifurcation is expected, with central areas maintaining high prices and gradual adjustment proceeding in suburban areas.
What should you be careful about when buying a used condominium?
It is important to develop a financial plan that incorporates future interest rate increases. We also recommend placing emphasis on the intrinsic value of the property—such as the future potential of the location, management conditions, and the soundness of the repair reserve fund—and making decisions after thoroughly researching surrounding market prices.
