Where rent has been rising (and falling) in Japan since the start of the pandemic

Over a year into the pandemic, as Tokyo has seen a net population lost to other prefectures, including the net movement of resident foreigners away the capital, what are we seeing in terms of average rent data in the greater Tokyo area?

In its latest survey, Tokyo Kantei, a Tokyo-based property data company, reports that average rent in greater Tokyo increased in July by 0.7% versus June and 6.3% year-on-year to ¥3,297 per square meter. This would mean, for example, that a 25-sqm apartment would cost ¥82,245 per month to rent.

Due to the greater share of properties in Tokyo versus Chiba, Saitama, and Kanagawa prefectures, price movements in the 23 Wards have a greater effect on the overall average for the greater capital region.

Let’s take a more in-depth look at the data.

Average rent in Tokyo is much higher than in the rest of the capital region, and the rest of the country, too

Average rent in Tokyo is much higher than anywhere else in Japan. This is a good basic fact to know if you are new to the Japanese real estate market. Here’s what average rent per square meter was in July, based on Tokyo Kantei data:

City Average Rent
in July 2021
in JPY
As % of
Tokyo 23 Ward
Rent
Tokyo 23 Wards 3,829
Yokohama 2,578 67.3%
Saitama 2,107 55.0%
Chiba 1,817 47.5%
Osaka 2,501 65.3%
Kobe 1,773 46.3%
Nagoya 2,000 52.2%

If you want to save on rent, it makes sense to consider living outside the 23 Wards proper and commute into town. Since more and more companies are also allowing (or even requiring) that people work-from-home, we can also expect more people to telecommute from Chiba, Saitama, or even further away.

However, this doesn’t mean that we should expect a sudden or substantial population drain away from Tokyo. As we covered in a recent post, there is such a problem with de-population and lack of economic growth in regional areas that the government is offering subsidies of as much as ¥3 million for people to move away out of Tokyo.

Conversely, if you are looking at this data from the perspective of a landlord, you will want to factor in vacancy rates and potential yield in addition to demographic factors, among many other things, if you are weighing the merits of a 23 Ward property versus one in Chiba, for example.

Where have rents risen the most this year?

Looking at city data, what we see is that average rent in the Tokyo 23 Wards has only risen marginally this year.

In the greater Tokyo area, the cities of Chiba, Yokohama, and Saitama have had the highest rates of growth in rent.

Year-on-Year Percentage Change in Average Rent by City in JPY, calculated based on data from Tokyo Kantei
City Jan 2021 February 2021 March 2021 April 2021 May 2021 June 2021 July 2021 Average Change
Tokyo 23 Wards 3.21% 1.40% 0.60% 0.18% -0.26% -0.85% -0.52% 0.54%
Yokohama 12.52% 5.62% 1.65% 1.83% 0.99% 2.72% 3.00% 4.05%
Saitama 0.82% -3.06% -0.15% 0.34% 2.72% 10.29% 10.60% 3.08%
Chiba -1.56% -0.90% 6.23% 11.79% 16.09% 16.57% 15.81% 9.15%
Osaka 0.24% -1.47% -0.04% -2.44% -0.28% -2.94% -0.60% -1.07%
Kobe -2.87% -2.15% 0.00% 0.17% 1.11% -0.88% -3.69% -1.19%
Nagoya 4.47% 2.04% 2.27% 2.98% 3.07% 4.75% 5.10% 3.53%

The busy rental season in Japan is January to March, so we usually expect to see year-on-year increases in average rent in these months.

More unusual is year-on-year increases during the slower summer months (May to July) when most people have already settled into their apartments. This is one of the points that stands out in the data for Chiba. In normal pre-pandemic years, we would also expect to see an uptick as we head into fall; and we’ll be analyzing this as the data comes out in the next few months.

So far this year, Osaka and Kobe have both had, on average, negative monthly growth in rent, while Nagoya, has seen relatively higher growth.

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Average rent in Tokyo

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Sources:

August 2021 Tokyo Kantei Condominium Rent Report

July 2021 Tokyo Kantei Condominium Rent Report

June 2021 Tokyo Kantei Condominium Rent Report

May 2021 Tokyo Kantei Condominium Rent Report

April 2021 Tokyo Kantei Condominium Rent Report

March 2021 Tokyo Kantei Condominium Rent Report

February 2021 Tokyo Kantei Condominium Rent Report

Lead photo: Sawara neighborhood of Katori City, Chiba via iStock 1315319930