According to Tokyo Kantei, the average price of a brand new apartment in Japan in 2014 was 7.17 times the average annual income (up 0.58 points from 2013), while a second-hand apartment (10 years old) was 4.92 times the average annual income (up 0.34 points). Incomes were down 1.4% nationwide, while new apartment prices were up 7.2% and secondhand apartment prices were up 6.1%.

The most affordable prefecture in Japan to buy a new apartment is Tochigi Prefecture, with a price-to-income ratio of 4.89 (down 0.53 points from 2013), and the most affordable place to buy a second-hand apartment is Kagawa Prefecture, with a ratio of 3.27 (up 0.33 points from 2013).

The most unaffordable prefecture in Japan for a new apartment is Kyoto, with a ratio of 10.98 (up 1.2 points). The second most unaffordable location for a new apartment was Ishikawa Prefecture, with a ratio of 10.97. The most unaffordable place for second-hand apartments is the Tokyo metropolitan area with a ratio of 7.61 (up 0.41 points).

Tokyo is the 3rd most expensive area in Japan for new apartments. In the Tokyo metropolitan area, the price-to-income ratio on a new apartment reached 10.61, as the price of new apartments increased by 8.1% over the previous year while average incomes decreased by 0.3%. The average price of a 70 sqm brand-new apartment in 2014 was 66,730,000 Yen (953,000 Yen/sqm), which was the highest level seen since 1993. This is the first time in five years that the ratio has exceeded a multiple of 10.

Over the past 30 years the ratio has only exceeded the multiple of 10 during Japan’s asset bubble in the late 1980s/early 1990s and in the mini-bubble of the early 2000s. At the peak of Japan’s asset price bubble, the average price of a brand new apartment in the Tokyo metropolitan area reached 18.12 times the average income. In 1990, the average price of a new 70 sqm apartment was 107,660,000 Yen, or 1,538,000 Yen/sqm. Before the bubble, the average price-to-income ratio in 1985 was 8.08.

Price-to-income ratios by area:

NEW APARTMENTS 2014 2013 Tokyo Metropolitan Area 10.61 9.79 Kanagawa 10.11 9.16 Saitama 9.24 7.90 Chiba 8.44 7.91 Greater Tokyo 9.68 8.80 Osaka 7.72 6.61 Kyoto 10.98 9.78 Hyogo 8.77 7.95 Nationwide 7.17 6.59

SECOND-HAND APARTMENTS 2014 2013 Tokyo Metropolitan Area 7.61 7.20 Kanagawa 6.38 5.99 Saitama 5.41 5.41 Chiba 5.26 5.24 Greater Tokyo 6.28 6.07 Osaka 5.14 4.72 Kyoto 7.27 6.58 Hyogo 5.97 5.67 Nationwide 4.92 4.58

Price-to-income ratio in other countries according to the Demographia International Housing Affordability Survey (2014):

Hong Kong: 17.0 times

Australia: 5.5 times Sydney: 9.8 times Melbourne: 8.7 times

New Zealand: 5.2 times Auckland: 8.2 times

Singapore: 5.0 times

United Kingdom: 5.0 times London (Greater): 8.5 times

Canada: 3.9 times Vancouver: 10.6 times

United States: 3.4 times Los Angeles: 8.0 times



About the data:

Apartment prices are based on the average price of a 70 sqm condominium, while incomes are estimated based on data provided by prefectural governments.

Sources:

The Nikkei Shimbun, August 4, 2015.

Tokyo Kantei, July 30, 2015.

11th Annual Demographia International Housing Affordability Survey, January 19, 2015.

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