Japan real estate market shows divergence in condo and house prices

The real estate market in the Tokyo metropolitan area and Kanagawa Prefecture is experiencing significant shifts. In Kanagawa, the market for used condominiums is seeing a continued upward trend, with unit prices in areas outside Yokohama and Kawasaki rising by 11.7% year-on-year to reach a 12-month high. Conversely, the price of used detached houses in these same non-urban areas fell by 3.8%, marking the first decline in nine months.

In the broader metropolitan area, the new condominium market faced a sharp contraction in September 2026. According to the Real Estate Economic Institute, the number of new condominium units released dropped by 40.1% year-on-year to 1,142 units. While average prices for new builds reached a record high of 114.94 million yen in the first half of the fiscal year, the September average saw a slight decline to 95.52 million yen.

Market indicators suggest a potential cooling period as the initial contract rate fell to 50.4%, well below the 70% benchmark for a healthy market. Analysts suggest that rising mortgage interest rates and high construction costs may be creating a cycle where properties are too expensive for many buyers, leading developers to limit supply to maintain high price points.