According to a recent survey by Tokyo Kantei, 2015 was the sixth consecutive year in which Japan’s income multiple (compared to the average price of a home) increased. This means that it is becoming less and less affordable for the average person to buy a home in Japan.
The “income multiple” is the ratio of the average price of a home to the average annual income. The lower the multiple, the more affordable it is for the average income-earner to buy a home.
This particular survey looked at the average price of a 70-sqm newly constructed condominium.
In 2015, the national “income multiple” hit 7.66, which means that the average price of a newly constructed condo nationwide was on average 7.66 times the average annual income.
According to Tokyo Kantei, nationwide, the average annual salary in 2015 was 4.29 million yen ($41,900) and the average price of a newly constructed 70-sqm condo was 32.88 million yen ($321,000). In 2014, the national income multiple was 6.25, so the 2015 income multiple increased by 22.6% compared to 2014.
The income multiple varies widely by prefecture because property prices and incomes tend to be higher in urban areas and because in many areas, average incomes are not keeping up with increases in real estate price appreciation.
In 2015, the income multiple increased in 36 of Japan’s 47 prefectures.
Most Affordable: Tochigi
According to the survey, the most affordable prefecture to buy a condominium in Japan in 2015 was Tochigi, which is located about 100 kilometers north of Tokyo. Tochigi also had the lowest income multiple in 2014. Tochigi is perhaps most well known for being home to Nikko National Park.
In 2015, Tochigi prefecture had an income multiple of 5.40. The average price of a 70-sqm condo in Tochigi cost 26.89 million yen ($263,000) and the average annual income was 4.98 million yen ($48,700).
Least Affordable: Kanagawa
The least affordable market based on income multiple was (not Tokyo!) but in neighbouring Kanagawa prefecture where the income multiple hit 11.70 in 2015. In Kanagawa, the average price of a newly constructed condo was 58.86 million yen ($576,000) and the average annual income was 5.03 million yen ($49,200). In 2014, the least affordable prefecture was Kyoto, which had an income multiple of 10.98.
Income Multiple by Prefecture
The following tables show the 2015 income multiple, average annual salary, and average price of a newly constructed 70-sqm condo by prefecture and major city. Dashes indicate that there was insufficient data to calculate average price of a condo for the market.
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You may also be interested in: 2014 Japan Home Affordability Survey