The average monthly rent for Tokyo condominiums declined 0.3% in July, the third consecutive month for the average to dip below the previous month’s rate, according to Tokyo Kantei, a real estate data company.
The price per square meter in central Tokyo’s 23 wards was ¥3,823 (US$27.9) – down ¥12 from June. It was also the first time in six months for the average monthly rent to decline on a year-to-year basis.
“Prices are going up but salaries are not,” Masayuki Takahashi, chief analyst at Tokyo Kantei, told Nikkei Asia. “Consumers know they have to reduce living costs but can’t cut expenditures for food and energy. It is only natural that they are trying to cut housing costs.
“Landlords know this and are reducing rent to fill up condos and lock in tenants.”
Japanese consumers know that the worst is yet to come, Takahashi said, pointing to a survey by data analysis company Nowcast that shows supermarkets have been unable to raise store prices in line with announcements by food brands.
Major companies producing ham, bacon and sausage, for instance, announced earlier this year price hikes of 4% to 15%. Yet, as of July, actual price increases for ham and bacon have been about 1.8%, while sausage prices have gone up 2.4%.
“This means the true wave of price increases will be felt from this autumn and beyond,” Takahashi said.
Such fears have triggered a race to bring down condo rents in Tokyo. “If there is a room of similar quality but slightly cheaper, consumers will flock to the cheaper option,” Takahashi said. “If landlords cannot fill the rooms now, they will have to wait for the next wave of company personnel moves in autumn or even next spring.
“After the war in Ukraine, people in Japan do not believe rising prices will come down in six or 12 months; they think this trend is staying and are preparing to defend against it.”
Tokyo Kantei’s statistics also show another trend. While condo rents in central Tokyo declined, those in the neighbouring prefectures of Kanagawa, Saitama and Chiba rose 0.2%, 0.5% and 0.4%, respectively.
“Under the new trend of working from home, people no longer feel the need to live as close to work as possible,” Takahashi said. “If they only have to go to the office once a week, they are happy to live in neighbouring prefectures, where rent is cheaper.”
The monthly average rent per square meter was ¥2,455 in Kanagawa, ¥1,877 in Saitama and ¥1,846 in Chiba.