Tokyo has 6 “central” wards: Chiyoda, Chuo, Minato, Shinjuku, Bunkyo, and Shibuya. Some people have been looking at average asking prices for condos here and coming to flawed conclusions, which I’d like to clear up. Asking price, AKA listing price, shows what a seller is looking to get, but does not reflect true demand. That is easier to gauge via actual sale prices.
To put this into perspective, if a price index is based on December 2022 prices, represented as a score of “100,” then we would see a 12-month average of 149.3 in April 2026 and 149.8 in May 2026. While not massive, this is an upward trend. That being said, if you were to look strictly at the month-on-month change from April 2026 to May 2026, successful sale prices actually dropped. The point of this contradiction is that the market is neither completely flattening nor falling into a full downturn.
The really useful information comes when we look at valuation gaps. Basically, what gap is there between a property’s estimated value, given market conditions and the property itself, versus what it actually sold for? This is often referred to as a “price premium.”
What we are seeing is that top-of-the-line properties are being sold at increasingly larger premiums. In fact, in 2022, the premium on properties valued in the top 5% was about 37%. In 2025, it jumped to 47%. So even if some headlines point to a market cooling, for luxury properties, that is anything but true.
Lower-end properties, however, saw the exact opposite situation. Properties valued in the bottom 5% were sold 27% under the estimate in 2022, dropping to 33% in 2025. Essentially, the gap is widening: nice properties are getting even more expensive while worse properties are getting cheaper.
While logic has long held that buying properties in the central wards would always be a good investment, current market trends are pointing to a new world where the exact minute details of a specific property matter more than just its address. For example, while estimated value can be derived from things like building age, location, and size, it can’t fairly account for things like name recognition on the part of the developer, whether or not it has a nice view, or how well the building is managed. While it’s hard to determine exactly what is causing this gap, there are far more variables in play than old data used to suggest.
All in all, “central Tokyo” on its own is no longer a golden ticket. It’s important to look at any condo in the wider context of the market. And while it’s useful to try to determine whether or not you’re paying a “premium” for a property, do keep in mind that paying above the valuation doesn’t suddenly mean you’re getting ripped off. It’s more than likely just the reality of current supply and demand. Need help parsing current prices and what might be available to you? The Dovetail team is here to help!
Source: https://www.nikkei.com/article/DGXZQOUB30BK90Q6A630C2000000/?n_cid=SNSTW001&n_tw=1783302202