Purchasing a home is one of the biggest decisions a person can make in their lifetime. But behind that decision lies a set of shifting social and economic trends that are influencing the housing market far more than many realize.
This article offers a clear and accessible overview of what’s currently happening in Japan’s real estate landscape—especially for those who are on the fence about buying a home.
Japan Has Land—But Not Much of It Is Livable
According to the Ministry of Land, Infrastructure, Transport and Tourism’s 2024 White Paper on Land, about 66% of Japan’s landmass is covered by forests. Only around 5% is actually usable as residential land.
This means that livable space in Japan has always been limited. Even during periods of population growth, people had little choice but to cluster in urban centers. For generations, Japan has grappled with the fundamental question: How do we live within limited space?
Japan’s “Housing Surplus” Actually Began 50 Years Ago
Japan’s trend toward an aging and declining population began slowly in the late 1970s. However, since the population was still growing at that time, housing development continued without pause.
That changed in 2011, when Japan’s population began to decline. As of 2024, Japan’s total population stands at about 123.8 million. By 2056, it’s projected to fall below 100 million. To put that into perspective, it’s as if the entire population of Taiwan—roughly 23 million people—simply vanished.
“Tokyo Will Be Fine” Is Becoming a Myth
You might think, “But Tokyo is crowded—surely this doesn’t apply there?” And it’s true that cities like Tokyo and Fukuoka are still seeing population growth.
However, even Tokyo is expected to enter population decline around 2030. It might not feel noticeable today, but a few years from now, you may begin to sense the shift.
Japan Already Has More Homes Than Households
In fact, Japan reached a housing surplus as far back as 1968, when the number of homes surpassed the number of households. And for more than 55 years since, housing has continued to be built.
By 2023, Japan had approximately 1.16 homes per household. The growing number of vacant homes isn’t a fluke—it’s the natural outcome of long-term trends.
Around 9 Million Vacant Homes Nationwide
In some regions, 1 in 5 homes sits empty. Nationwide, Japan currently has an estimated 9 million vacant homes, with a national vacancy rate of 13.8%. In rural prefectures like Wakayama, Tokushima, and Yamanashi, that rate exceeds 20%.
Outside tourist areas, it’s not uncommon to find empty streets and shuttered shopping districts. The urban-rural divide is widening more than many realize.
Japan Is Experiencing Its First Real Inflation in 41 Years
Over the past few years, rising energy costs, a weaker yen, and labor shortages have pushed Japan into its first significant inflationary period in more than four decades. In 2023, inflation rose 3.1% year-over-year, with a similar 3.0% increase in 2024.
Inflation Is Driving Up Real Estate Prices—But That’s Only Half the Story
Inflation reduces the value of money while increasing the relative value of assets like real estate. Since 2022, property prices in Japan have been on a slow upward trend.
However, it’s not that simple.
Here are some of the forces working against price increases:
- A shrinking population means declining housing demand
- Real wages aren’t rising
- Construction costs are soaring
- The demand gap between cities and rural areas is widening
Yet, prices—especially in Tokyo—continue to climb. Why?
A few key reasons:
- The lingering impact of Japan’s long-standing low interest rates
- Influx of foreign investment
- Japan’s global reputation as a “safe haven” for assets
In short, real estate prices don’t move in a straightforward, textbook fashion. Many factors are at play, and in most cases, the reasons for price movements only become clear in hindsight.
It’s Not About “Buying or Not”—It’s About How You Want to Live
By now, you might be thinking, “Buying a house sounds too complicated.” But what matters most isn’t whether you buy—it’s how you want to live. In today’s unpredictable world, you should look for a home you genuinely love—one that makes you say, “I want to live here!” or “I want to support the life I’d have in this house!”
And don’t forget: Choosing not to buy is a valid decision, too. But if you come across a home that truly speaks to you—so much so that you want to buy it—then that’s when the decision gains meaning.
Japan’s Housing Issues Reflect a Global Trend
Finally, it’s important to understand that Japan’s challenges with an aging, shrinking population aren’t unique. Many parts of the world—Europe and the U.S. included—are facing falling birth rates. Even the U.S. is projected to begin population decline around 2080 (possibly sooner depending on immigration policies).
In other words, a world of declining populations is becoming the new global norm.
We are entering an era in which each of us must ask: What kind of life do I want to lead in this changing world? And more importantly, we must keep our answers up to date as the world continues to shift.