Does Tokyo Real Estate Really Depreciate? (2026 Data Breakdown)

Tokyo property does not "go to zero" in any economically meaningful way in areas like central Tokyo where land demand is durable. What does reliably depreciate is the building for tax/accounting purposes (減価償却 / depreciation)—especially under statutory useful-life rules—while land generally does not depreciate under Japanese tax depreciation and can appreciate materially over time. Nationally, the "Japan property goes to zero" story is a misleading half-truth: in some rural, weak-demand markets, market prices can approach zero because demolition, vacancy, and liquidity risk overwhelm resale value (and "0-yen properties" are documented due to lack of demand).

In contrast, official 2025 land-price data shows continued broad increases, including strong rises in major metros, and Tokyo's core areas remain structurally supported by net in-migration and constrained land supply. Understanding the real estate market dynamics and how properties in Tokyo behave requires separating myth from data.

Key Takeaways

• "Japanese property depreciates to zero" is not true as a market law; it is often a confusion between tax depreciation and market pricing. The real estate landscape in japan requires understanding multiple valuation systems.

• In central Tokyo, the key is land value vs building value. Land can remain valuable and can appreciate even as building book value depreciates. When evaluating tokyo homes or condos, separating these components is essential.

• Official Tokyo land benchmarks show substantial increases across multiple wards over 2020–2025, with core wards leading. This demonstrates how properties can appreciate in value even as the Japanese government maintains strict tax depreciation schedules.

• Tokyo wards have strong net in-migration (not outflow), supporting demand for both rental income opportunities and owner-occupied properties. This sustained inflow of japanese people and international residents supports real estate prices.

• "Zero-yen properties" are real—but they are market-structure outcomes in weak-demand areas, often tied to vacancy, legal frictions, and demolition burdens. These cases should not be generalized to properties in tokyo or other high-demand urban areas.

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Why People Think Japanese Property Goes to Zero

The "Tokyo real estate depreciation" myth usually blends four different ideas into one sentence and then treats them as identical. That's the core error when it comes to real estate valuation in the Japanese real estate market.

First is the post-bubble narrative: after Japan's asset bubble burst, many regions experienced long periods of weak pricing, and some places never recovered in nominal terms. That macro memory persists—especially among overseas investors who learned about the Japanese economy through 1990s/early-2000s headlines rather than current official data showing multi-year nationwide gains in land prices. The real estate landscape has changed significantly, yet perceptions have not caught up with Tokyo's real estate market performance over the last 30 years.

Second is a tax/accounting confusion: Japan's tax depreciation (減価償却) applies to the building (and certain equipment), not the land. When investors—both domestic and foreign—hear "the building depreciates to zero," they often incorrectly assume market value must also go to zero. Statutory useful lives for structures can be short on paper (e.g., 木造/wooden residential 22 years; RC residential 47 years), which reinforces the misconception about how japanese properties tend to depreciate for tax purposes versus their actual investment value.

Third is an overgeneralization about structure type: Japan has a large stock of wooden houses, and older detached houses in weak-demand locations frequently trade close to land-only value (or below demolition costs). That reality is then incorrectly projected onto central Tokyo condominiums, which are typically RC/S (reinforced concrete/steel), built to last, and sit on scarce urban land with high demand. The assumption that japanese houses depreciate uniformly ignores the fundamental differences between a wooden house in rural areas and reinforced concrete buildings in properties in central Tokyo.

Fourth is demographic shorthand: Japan's national population decline is real, but housing-market outcomes are local. Official vacancy data shows Japan's national vacancy rate is high, but Tokyo's vacancy rate is meaningfully lower than the national figure, and "problem vacancies" are concentrated differently by region and housing type. When evaluating real estate in Japan, understanding these local variations is critical for both property owners and potential investors considering real estate investments.

How Depreciation Actually Works in Japan

The right way to answer "does Japanese property depreciate?" is to define three different depreciation systems—because they produce different "values," for different purposes, and affect everything from rental income calculations to long-term value assessments.

Building depreciation under tax law

Japan's depreciation (減価償却) is rule-based. The National Tax Agency publishes statutory useful lives (耐用年数) by structure and use. For residential buildings, the headline figures foreign buyers most often encounter when evaluating houses in Japan are: 木造 (wood) 22 years; 鉄筋コンクリート造/RC 47 years; and other categories such as steel structures vary by specification.

Two key implications follow:

• The "building goes to zero" claim is usually referring to a tax basis being depreciated over a statutory life—not a statement that the building becomes unusable or unmarketable. Japanese homes and buildings in Japan are often well-maintained and functional long past their tax depreciation period.
• Depreciation is a tax/accounting allocation of cost over time; it is not a market price forecast. The value of real estate depends on many factors beyond tax depreciation schedules.

Structural lifespan assumptions (wood vs RC vs steel)

Useful life for tax is not the same as service life or "how long people actually live in the building." Japan's housing-policy materials explicitly cite research estimating much longer average survival periods for housing stock than tax lives imply. For example, MLIT-cited research estimates an average lifespan (残存率50%の期間) for wooden dedicated houses around 65 years (with increases relative to earlier surveys), showing that even wooden houses can last significantly longer than their tax depreciation period.

For investors evaluating investment properties, the practical takeaway is: tax depreciation schedules are conservative accounting conventions, not engineering endpoints. This is especially true for earthquake-resistant, reinforced concrete buildings designed to withstand the seismic activity posed by natural disasters in the Pacific Ring of Fire region where Japan is located.

Accounting depreciation vs market depreciation

A clean mental model for foreign buyers considering a home in Japan:

• Accounting depreciation (減価償却): a statutory, predictable schedule applied to the building's cost for tax purposes.
• Market depreciation: what buyers will pay for a unit/building at resale, which depends on land value, location liquidity, management quality, floor plan utility, regulation, and redevelopment expectations. The resale value of a property in Japan is driven by market forces, not accounting rules.

Official housing-policy materials show that older homes are actively transacted, and the share of "older" purchased used homes increased over time (e.g., households purchasing used condos with meaningful shares in older building-age bands). This is direct evidence that "old" does not mean "untradeable" in Japan's housing market. Well-maintained older homes may even increase in value if located in areas with high demand.

Fixed asset tax valuation vs transaction price

Fixed asset tax (固定資産税) uses an assessed value (評価額) that is purposefully not the same as market price. Local-government materials describe an assessed land valuation approach targeting roughly 70% of published land prices (地価公示価格) and a revaluation cycle typically every 3 years (評価替え).

This matters because foreign buyers often see a "valuation" on a tax document and assume it's a proxy for market value or purchase price. In Japan it is not. The assessed-value system is designed for tax stability and uniformity, not for marking-to-market, which affects how japanese buyers and international investors evaluate property value.

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Depreciation systems comparison table

"Value" you're looking at	Japanese term	What it applies to	What it is used for	Why it can mislead foreign buyers
Tax/accounting depreciation	減価償却	Mainly the building (not land)	Tax computation, accounting bases	Can reach very low book values even while resale prices stay high in land-scarce areas due to high demand
Fixed asset tax assessed value	固定資産税 評価額	Land + building (assessment rules differ)	Annual property taxation	Often anchored to published-land-price logic and revaluation rules, not market clearing prices for real estate
Market transaction pricing	取引価格 / 成約価格	The whole property (market)	Real buy/sell decisions	Depends on demand, liquidity, credit conditions, redevelopment, and land scarcity; not "straight-line" depreciation over time

The Critical Difference: Land vs Building in Tokyo

A decision-grade answer to "Does Japanese property depreciate?" requires splitting value into:

• Land (土地): usually the long-duration component; does not depreciate under tax depreciation and can appreciate. The value of the land often represents the primary component of long-term value in Tokyo properties.
• Structure/building (建物): depreciates in tax/accounting terms; may also decline in market value—but not necessarily to zero, especially when land is valuable and the unit remains functional. Understanding this split is essential when evaluating the value of japanese real estate.

Why land retains value

In Japan's land-price public notice system (地価公示), MLIT evaluates "normal prices" per square meter as of January 1 each year and publishes them as a benchmark for land markets. This system exists precisely because land is treated as a benchmark asset whose price discovery supports taxation, appraisal, and transaction transparency. The land price data provides critical insight into real estate value trends.

In Tokyo's core wards, land is scarce, infrastructure is dense, and demand is reinforced by a consistent inflow of japanese people and international residents. That is the structural reason "Japan building lifespan" rules do not translate into "Tokyo property value 2026 goes to zero." Properties in tokyo benefit from sustained demand that supports land values even as buildings age.

Why central Tokyo condos can be land-dominant

Condominiums in Japan typically include:

• a private unit (専有部分), and
• a fractional land share (土地持分) in the underlying site (land as a co-owned asset).

Even when the building's tax basis depreciates, the land share remains. This is why older homes in central areas can still sell at high prices: the building is partly a "wrapper" around scarce land and location utility. When you buy the land component along with the condominium unit, you're investing in an asset that can appreciate in value regardless of building age. This is a key distinction in japan's real estate market compared to other markets.

Ownership type impact

For foreign buyers considering real estate investments, the most important ownership distinction is:

• Freehold (所有権): you own the land share and the unit; residual value is anchored in land. This ownership type provides the strongest protection for resale value over time.
• Leasehold (借地権): you own the unit but lease the land; residual value depends on lease terms and end-of-term outcomes.

MLIT's official explanations of fixed-term leasehold structures (定期借地権) emphasize that some forms are designed so the contractual relationship ends and the land is returned (i.e., no renewal), changing the long-run residual value logic compared with freehold. Understanding ownership type is critical when evaluating income from real estate and long-term investment value.

Why demolition resets the building but land persists

Demolishing and rebuilding can reset the structure value and utility, but the land's location value remains. That is why, in land-scarce areas, "depreciation" often expresses itself as:

• building value declining relative to land, and/or
• a shift toward redevelopment value (what can be rebuilt next) rather than existing structure value.

The option to rebuild is particularly valuable in areas like central tokyo where rising construction costs are offset by strong land values and consistent demand for new homes. Some suggest japanese properties are rebuilt every 30 years as part of natural renovation cycles, though this varies significantly by location and property type.

Minato condo example: 80 million JPY with land/building split (illustrative)

Below is a hypothetical but evidence-anchored breakdown using Tokyo's published average residential land prices for 2025 and statutory tax lives. Assumptions are stated; the land price anchor is official.

Assumptions (explicit)

• Purchase price: ¥80,000,000 (approximately 80 million yen)
• Location: Minato ward (average residential land price benchmark: ¥2,577,300/m² as of Jan 1, 2025)
• Land share attributed to the unit: 12.0 m²-equivalent (illustrative; actual varies by building/site density)
• Building structure: RC residential; statutory useful life 47 years
• Building component is the residual after land component for illustration.

Land vs building split (example)

Item	Calculation	Estimate
Land component	12.0 m² × ¥2,577,300/m²	¥30,927,600
Building component (residual)	¥80,000,000 − ¥30,927,600	¥49,072,400

What happens after 40 years?

Under tax/accounting depreciation, much of the building's depreciable basis has been allocated over time (RC residential useful life 47 years). However, this doesn't mean the property will lose value in the market.

The land component does not "depreciate to zero" on that schedule; it is anchored in land prices and liquidity. In a core ward where land benchmarks have risen over time, the land share can remain substantial even as the building ages. Land in japan, particularly in central tokyo, tends to hold or appreciate in value.

Transaction implication: resale pricing becomes increasingly sensitive to (a) land benchmark trends, (b) building management quality and repair reserves, and (c) redevelopment optionality—rather than to tax depreciation status. Well-maintained properties can maintain strong resale value even decades after construction.

What 2025–2026 Data Actually Shows

This section separates three layers of evidence: published land benchmarks (公示地価 / 基準地価), market transaction indicators (REINS / MLIT price databases), and Tokyo-vs-national divergence in the japanese real estate market.

Public land price notice (公示地価) shows multi-year increases in Tokyo wards

Tokyo's published land-price tables (Jan 1 benchmarks) show very high residential land price levels in core wards, and strong multi-year changes in those levels reflecting an increase in value across tokyo homes and tokyo properties.

To make this investor-usable, the table below uses only official Tokyo-published averages (区市町村別用途別平均価格表) and the official prior-year change rate table for 2024 (対前年変動率).

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Five-year land growth comparison table (residential land benchmarks)

Time window disclosure

• 2024 Growth: YoY % change from Jan 1, 2023 → Jan 1, 2024 (official change-rate table)
• 2025 Growth: YoY % change from Jan 1, 2024 → Jan 1, 2025 (computed from official average-price tables)
• Five-year change: Jan 1, 2020 → Jan 1, 2025 (computed from official average-price tables)

Ward (residential land)	2024 Growth	2025 Growth	Five-year change (2020→2025)
Chiyoda City	+6.7%	+10.6%	+18.5%
Chuo City	+7.5%	+14.1%	+30.8%
Minato City	+7.2%	+12.2%	+28.3%
Shinjuku City	+6.4%	+12.7%	+27.1%
Shibuya City	+7.0%	+11.5%	+26.1%
Setagaya City	+4.0%	+6.1%	+13.8%
Nerima City	+4.0%	+6.0%	+14.5%
Adachi City	+4.7%	+8.9%	+20.8%
Edogawa City	+4.6%	+4.6%	+13.8%

Interpretation (why this resolves the myth):

Even within the 23 wards, core wards and non-core wards diverge, but the direction is broadly upward across these examples when measured via official benchmarks. This data from tokyo's real estate market demonstrates that properties can appreciate in value substantially over time, particularly in central areas.

This is structurally inconsistent with the blanket claim "Tokyo property depreciates to zero." The real estate prices in these areas show sustained growth, contradicting the myth that japanese real estate inevitably loses value. These land values provide the foundation for understanding why tokyo properties maintain strong resale value.

Baseline land price survey (基準地価) confirms broad rises mid-2025

The Tokyo Metropolitan Government's 2025 baseline land-price report (as of July 1, 2025) shows:

• In the wards, the average change rate remained positive, with all wards positive in residential and strong gains in commercial real estate.
• Residential average change for all wards is shown as 8.3% (up from 6.7% the prior year), and commercial as 13.2% (up from 9.7%).

This matters because it reinforces that the 2025 land-price environment was not a single-point "January-only" artifact. The consistent increase in value across multiple measurement periods confirms the strength of tokyo's real estate market and japan's real estate market in major urban centers.

REINS market statistics show rising condominium transaction prices in the capital region

The industry's core transaction-based signal for the resale market is REINS (成約価格/contracted prices) in the capital region. The 2025 capital-region report shows that average contracted prices for existing condominiums reached about ¥52 million yen, rising year-over-year and continuing a long-running uptrend in average contracted unit prices.

Even for investors focused specifically on central Tokyo, this is important context because:

When the resale market price level is rising while tax depreciation mechanically reduces building book value, it is direct evidence that market price ≠ accounting book value. Properties in central tokyo demonstrate that real estate value can grow even as buildings depreciate over time for tax purposes, particularly when the condominium units include valuable land shares.

Core wards vs non-core: a clean divergence snapshot

Using the same official residential land benchmark tables, compare the level and rate environment for different types of tokyo properties:

Segment	Example wards	2025 average residential land level (JPY/m²)	2025 YoY (avg-price basis)
Core wards	Chiyoda / Chuo / Minato / Shibuya	~¥1.65M–¥3.28M	+~+10% to +14%
Outer/non-core sample	Setagaya / Nerima / Edogawa	~¥0.41M–¥0.72M	~+4.6% to +6.1%

Source: Tokyo public land-price average tables (2024 and 2025).

This divergence shows that while all areas can appreciate, properties in central locations with luxury real estate characteristics show stronger value appreciation. Understanding these variations is essential for real estate investments in japan.

Where Property Actually Does Go to Zero

"Japan property goes to zero" is not pure fiction—it is a location-conditional outcome that happens when the costs and constraints of ownership exceed demand. Understanding where properties tend to depreciate dramatically helps clarify why tokyo homes behave differently.

Official, policy-relevant evidence exists. A MLIT-related report documenting "0-yen properties" shows cases where properties are effectively transferred at approximately zero because:

• the structure is obsolete and in poor condition,
• legal/registration or lien issues impede normal sale,
• there is no local market depth, and
• the expected demolition/maintenance burden overwhelms buyer willingness.

That same report explicitly notes a key mechanism foreign investors often miss: in some instances, fixed asset tax assessed values can remain high even when the market value is approximately zero, creating tax distortions (e.g., gift-tax implications) and further reducing liquidity.

Data-driven conditions where "zero" becomes plausible

• Rural depopulating areas + weak demand: National vacancy is high (13.8%), and "non-rental/non-for-sale" vacant homes exist at scale; these conditions raise the probability of near-zero pricing in areas without demand. These areas lack the characteristics that allow properties in tokyo to maintain value.
• Oversupply zones: High vacancy combined with low inflow and low buyer liquidity can force pricing to reflect demolition costs rather than shelter utility.
• Non-redevelopable land constraints: access, zoning, or legal constraints that prevent viable reuse reduce residual value toward zero because "option value" disappears. Unlike properties in central tokyo where you can rebuild, some locations offer no viable renovation or reconstruction options.
• Leasehold (借地権) termination risk: fixed-term leaseholds are specifically designed to end without renewal, and end-of-term dynamics can compress value if buyers discount remaining term and end-state obligations.
• Old wooden houses with negligible structure value + weak land demand: the structure can be effectively worthless while the land is also weakly demanded, resulting in "near-zero" behavior. This contrasts sharply with wooden houses in areas like central tokyo, where even older homes may retain substantial value due to the land component.

Why Central Tokyo Behaves Differently

Central Tokyo "does not go to zero" because it combines population inflow, income and employment concentration, and land scarcity—a fundamentally different demand regime than depopulating rural markets. Properties in central tokyo benefit from structural factors that support long-term value.

Internal migration into wards (転入超過)

Tokyo's official migration overview (based on the resident-register migration report) shows strong net inflow in 2024:

• Tokyo overall net inflow (転入超過) from other prefectures: 79,285.
• Tokyo wards (区部) net inflow: +58,804.

For 2025, the national statistics show Tokyo's net inflow remains large even with year-to-year variation:

• Tokyo net inflow (転入超過) in 2025: 65,219.

This is the most direct "why Tokyo behaves differently" anchor: persistent net inflow increases the probability that land retains liquidity and pricing power. This sustained demand supports rental income for investment properties and maintains high demand for both new homes and existing properties.

Vacant homes: Tokyo differs from the national "空き家 problem"

Official housing statistics show:

• National vacancy rate: 13.8% (2023).
• Tokyo vacancy rate: 11.0% (2023).

Tokyo's lower vacancy rate does not mean "no vacancy problem," but it signals different market tightness, especially when combined with net inflow data. This tighter market helps explain why tokyo properties maintain stronger resale value compared to the national average for houses in japan.

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Infrastructure density and land scarcity

The land-price system itself (公示地価 / 基準地価) treats Tokyo's wards as distinct regions (e.g., "都心5区") because the real estate market behaves differently there, with broad price rises in mid-2025. The combination of infrastructure density and land scarcity means that land in japan's capital commands premium pricing, and properties in central areas benefit from sustained investment value.

Is the Depreciation Myth Structurally Outdated?

The myth survives because it describes an older accounting story and generalizes it into a market claim. Structural conditions changed in japan's real estate market over the last 30 years, yet the perception that japanese houses depreciate uniformly persists.

Interest-rate regime and monetary policy

Japan's monetary regime shifted notably:

• In March 2024, the BOJ revised its policy framework and moved short-term rate guidance into non-negative territory (e.g., 0–0.1% guidance).
• In July 2024, policy guidance referenced a higher short-term rate level and a plan to reduce long-term JGB purchases over time.
• By December 2025, the BOJ decision materials describe raising short-term rates to around 0.75% from around 0.5%, while still characterizing the environment as supportive in real terms.

The macro point for real estate is not "rates only go down," but that Tokyo's land market in 2025 remained in an uptrend even as Japan normalized policy relative to the deep negative-rate era and the previous period of low interest rates. That is inconsistent with a blanket "property always depreciates" claim. Real estate investments have remained attractive even as financing conditions evolved.

Construction cost inflation changes the replacement-value floor

Official MLIT monthly economic reporting shows construction cost deflator levels and year-over-year inflation. For example, the August 2025 construction cost deflator is shown around 130.9 (with a year-over-year increase), indicating a rising replacement-cost environment with rising construction costs.

When replacement costs rise, it can lift the effective floor under redevelopment and new-build pricing in scarce areas—one reason older homes can still trade at high prices if the land is valuable and replacement is expensive. This is particularly relevant when evaluating whether to rebuild or renovate existing properties. The demand for new construction in central tokyo must compete with rising construction costs, which supports the value of existing well-maintained properties.

Transaction transparency improved

MLIT's transaction price information system (now delivered through the Real Estate Information Library) has accumulated millions of transactions and explicitly exists to improve transparency and decision-making for domestic and foreign buyers evaluating the japanese real estate market.

In a world where buyers can observe transaction ranges more easily through organizations like the Real Estate Economic Institute, simplistic myths tend to weaken—unless they are anchored in the wrong "value" definition (tax book value). Improved transparency helps both japanese buyers and international investors understand how properties appreciate in value or depreciate over time based on real market data.

What Would Actually Cause Tokyo Property to Collapse?

A neutral, mechanism-based view: Tokyo property would not need to "depreciate" mechanically to fall; it would need a demand shock, a financing shock, or a policy shock strong enough to overwhelm land scarcity. Understanding these risks is essential for evaluating real estate in japan as an investment.

Key collapse pathways (indicators to watch)

• Sharp interest-rate normalization: higher borrowing costs reduce purchasing power and cap rates; watch BOJ policy path and bank mortgage pricing. A shift away from low interest rates could impact both property owners and new buyers, affecting real estate prices across tokyo's real estate market.
• Liquidity freeze / credit contraction: even with stable "fundamentals," transaction volumes can fall and price discovery can gap lower. MLIT's transaction data infrastructure exists because liquidity and comparables matter. Without active transactions, even properties with strong fundamentals can lose value temporarily.
• Population outflow from Tokyo wards: sustained negative net flow would undermine rental and resale demand; Tokyo's current data shows the opposite, but it is a watch item. If japanese people and international residents begin leaving tokyo in large numbers, the demand for new homes and existing properties would decline.
• Office demand collapse with second-order effects: if employment density shifts materially, residential demand can follow. This would affect rental income for investment properties and overall real estate value.
• Policy/tax/zoning changes: changes impacting redevelopment economics or foreign capital rules can reprice land optionality and affect the ability to rebuild or conduct major renovation projects.

The key is that "collapse" is not an accounting inevitability; it is a macro + local demand event. Even earthquake-resistant buildings designed for seismic activity and natural disasters like tsunamis and other natural disasters face market risk if demand fundamentals deteriorate.

What This Means for Buyers in 2026

Foreign buyer perspective

Foreign buyers should treat Tokyo as a market where:

• land value vs building value is the core decomposition when evaluating a japanese house or condominium, and
• legal form (freehold vs leasehold) changes long-run residual value.

Use official benchmarks:

• check land benchmarks (公示地価 / 基準地価) to understand land price trends, and
• verify market comparables through MLIT's Real Estate Information Library and transaction price disclosure system to assess realistic resale value.

Understanding japan's unique position in the Pacific Ring of Fire and how earthquake-resistant construction affects long-term value is also important. Properties that are well-maintained and built to last offer better protection against risks posed by natural disasters.

Long-term resident perspective

If the goal is long-term occupancy, the relevant question is less "does the building depreciate?" and more:

• will the unit remain functional,
• is the building well-maintained (repairs/reserves), and
• is the land/liquidity profile robust for maintaining property value over time.

Official evidence that older homes and used condos are part of the transaction market supports this view: the market can price utility and land even when the building is not "new." Japanese homes that are well-maintained can provide stable value and rental income for decades.

Short-term flip risk

Short holding periods are more exposed to:

• financing shifts (BOJ policy changes moving away from low interest rates), and
• liquidity risk (bid-ask widening).

A market where land prices are rising can still have short-term volatility, especially if credit conditions change quickly. Buyers focused on resale within a few years should pay particular attention to current real estate prices and financing conditions.

Land-dominant vs building-dominant strategy

• Land-dominant (core wards, scarce sites): more resilient to the "building depreciation" narrative. Properties in central tokyo where land values represent the majority of purchase price tend to appreciate or hold value better.
• Building-dominant (weak land demand): more likely to behave like the "go to zero" stories documented in rural/illiquid cases. In areas with lack of demand, even newer buildings may lose value rapidly.

Risk mitigation checklist (2026)

• Ownership form: prioritize freehold (所有権) when long-run residual value is the goal; price leasehold (借地権) explicitly by remaining term and end-state. Understanding whether you buy the land or lease it fundamentally affects long-term value.
• Location liquidity: use official land benchmarks and transaction databases for comparables. Properties in areas like central tokyo with high demand offer better liquidity for resale.
• Building structure and lifecycle: understand tax life vs actual lifespan; don't confuse book value with market value. Reinforced concrete buildings with 47 years tax life often remain functional and valuable much longer. Even wooden houses that are well-maintained can last far beyond their tax depreciation period.
• Management quality: repair reserves, planned major works, and governance affect whether properties maintain value over time and can even increase in value through proper maintenance and renovation.
• Redevelopment optionality: zoning, site shape, and local redevelopment momentum determine whether you can rebuild and create new value when buildings age.
• Taxes: separate fixed asset assessed value from market price; confirm assessment logic and revaluation timing to avoid confusion about actual property value.

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Infrastructure density and land scarcity

The land-price system itself (公示地価 / 基準地価) treats Tokyo's wards as distinct regions (e.g., "都心5区") because the real estate market behaves differently there, with broad price rises in mid-2025. The combination of infrastructure density and land scarcity means that land in japan's capital commands premium pricing, and properties in central areas benefit from sustained investment value.

Is the Depreciation Myth Structurally Outdated?

The myth survives because it describes an older accounting story and generalizes it into a market claim. Structural conditions changed in japan's real estate market over the last 30 years, yet the perception that japanese houses depreciate uniformly persists.

Interest-rate regime and monetary policy

Japan's monetary regime shifted notably:

• In March 2024, the BOJ revised its policy framework and moved short-term rate guidance into non-negative territory (e.g., 0–0.1% guidance).
• In July 2024, policy guidance referenced a higher short-term rate level and a plan to reduce long-term JGB purchases over time.
• By December 2025, the BOJ decision materials describe raising short-term rates to around 0.75% from around 0.5%, while still characterizing the environment as supportive in real terms.

The macro point for real estate is not "rates only go down," but that Tokyo's land market in 2025 remained in an uptrend even as Japan normalized policy relative to the deep negative-rate era and the previous period of low interest rates. That is inconsistent with a blanket "property always depreciates" claim. Real estate investments have remained attractive even as financing conditions evolved.

Construction cost inflation changes the replacement-value floor

Official MLIT monthly economic reporting shows construction cost deflator levels and year-over-year inflation. For example, the August 2025 construction cost deflator is shown around 130.9 (with a year-over-year increase), indicating a rising replacement-cost environment with rising construction costs.

When replacement costs rise, it can lift the effective floor under redevelopment and new-build pricing in scarce areas—one reason older homes can still trade at high prices if the land is valuable and replacement is expensive. This is particularly relevant when evaluating whether to rebuild or renovate existing properties. The demand for new construction in central tokyo must compete with rising construction costs, which supports the value of existing well-maintained properties.

Transaction transparency improved

MLIT's transaction price information system (now delivered through the Real Estate Information Library) has accumulated millions of transactions and explicitly exists to improve transparency and decision-making for domestic and foreign buyers evaluating the japanese real estate market.

In a world where buyers can observe transaction ranges more easily through organizations like the Real Estate Economic Institute, simplistic myths tend to weaken—unless they are anchored in the wrong "value" definition (tax book value). Improved transparency helps both japanese buyers and international investors understand how properties appreciate in value or depreciate over time based on real market data.

What Would Actually Cause Tokyo Property to Collapse?

A neutral, mechanism-based view: Tokyo property would not need to "depreciate" mechanically to fall; it would need a demand shock, a financing shock, or a policy shock strong enough to overwhelm land scarcity. Understanding these risks is essential for evaluating real estate in japan as an investment.

Key collapse pathways (indicators to watch)

• Sharp interest-rate normalization: higher borrowing costs reduce purchasing power and cap rates; watch BOJ policy path and bank mortgage pricing. A shift away from low interest rates could impact both property owners and new buyers, affecting real estate prices across tokyo's real estate market.
• Liquidity freeze / credit contraction: even with stable "fundamentals," transaction volumes can fall and price discovery can gap lower. MLIT's transaction data infrastructure exists because liquidity and comparables matter. Without active transactions, even properties with strong fundamentals can lose value temporarily.
• Population outflow from Tokyo wards: sustained negative net flow would undermine rental and resale demand; Tokyo's current data shows the opposite, but it is a watch item. If japanese people and international residents begin leaving tokyo in large numbers, the demand for new homes and existing properties would decline.
• Office demand collapse with second-order effects: if employment density shifts materially, residential demand can follow. This would affect rental income for investment properties and overall real estate value.
• Policy/tax/zoning changes: changes impacting redevelopment economics or foreign capital rules can reprice land optionality and affect the ability to rebuild or conduct major renovation projects.

The key is that "collapse" is not an accounting inevitability; it is a macro + local demand event. Even earthquake-resistant buildings designed for seismic activity and natural disasters like tsunamis and other natural disasters face market risk if demand fundamentals deteriorate.

What This Means for Buyers in 2026

Foreign buyer perspective

Foreign buyers should treat Tokyo as a market where:

• land value vs building value is the core decomposition when evaluating a japanese house or condominium, and
• legal form (freehold vs leasehold) changes long-run residual value.

Use official benchmarks:

• check land benchmarks (公示地価 / 基準地価) to understand land price trends, and
• verify market comparables through MLIT's Real Estate Information Library and transaction price disclosure system to assess realistic resale value.

Understanding japan's unique position in the Pacific Ring of Fire and how earthquake-resistant construction affects long-term value is also important. Properties that are well-maintained and built to last offer better protection against risks posed by natural disasters.

Long-term resident perspective

If the goal is long-term occupancy, the relevant question is less "does the building depreciate?" and more:

• will the unit remain functional,
• is the building well-maintained (repairs/reserves), and
• is the land/liquidity profile robust for maintaining property value over time.

Official evidence that older homes and used condos are part of the transaction market supports this view: the market can price utility and land even when the building is not "new." Japanese homes that are well-maintained can provide stable value and rental income for decades.

Short-term flip risk

Short holding periods are more exposed to:

• financing shifts (BOJ policy changes moving away from low interest rates), and
• liquidity risk (bid-ask widening).

A market where land prices are rising can still have short-term volatility, especially if credit conditions change quickly. Buyers focused on resale within a few years should pay particular attention to current real estate prices and financing conditions.

Land-dominant vs building-dominant strategy

• Land-dominant (core wards, scarce sites): more resilient to the "building depreciation" narrative. Properties in central tokyo where land values represent the majority of purchase price tend to appreciate or hold value better.
• Building-dominant (weak land demand): more likely to behave like the "go to zero" stories documented in rural/illiquid cases. In areas with lack of demand, even newer buildings may lose value rapidly.

Risk mitigation checklist (2026)

• Ownership form: prioritize freehold (所有権) when long-run residual value is the goal; price leasehold (借地権) explicitly by remaining term and end-state. Understanding whether you buy the land or lease it fundamentally affects long-term value.
• Location liquidity: use official land benchmarks and transaction databases for comparables. Properties in areas like central tokyo with high demand offer better liquidity for resale.
• Building structure and lifecycle: understand tax life vs actual lifespan; don't confuse book value with market value. Reinforced concrete buildings with 47 years tax life often remain functional and valuable much longer. Even wooden houses that are well-maintained can last far beyond their tax depreciation period.
• Management quality: repair reserves, planned major works, and governance affect whether properties maintain value over time and can even increase in value through proper maintenance and renovation.
• Redevelopment optionality: zoning, site shape, and local redevelopment momentum determine whether you can rebuild and create new value when buildings age.
• Taxes: separate fixed asset assessed value from market price; confirm assessment logic and revaluation timing to avoid confusion about actual property value.

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FAQ Section

Does Japanese property always depreciate?

No—not as a market rule when it comes to real estate value. Two things can be true at once in the japanese real estate market: (1) the building is depreciated under tax/accounting rules (減価償却) with statutory useful lives, and (2) the market price of the full property can rise if land demand and liquidity are strong. Land-price benchmarks are published annually to represent "normal" land pricing and have risen nationally for multiple consecutive years through 2025, showing that market price dynamics are not "always down." Properties in central tokyo and other high-demand areas can appreciate in value significantly over time, and even properties built 30 years ago can maintain strong resale value if well-maintained and located on valuable land.

Do Tokyo condos lose value after 30 years?

They can—but "after 30 years" does not imply "near zero" in terms of real estate value. Official housing-policy materials show that older used condos (including 28–37 years and even 38+ years) are part of the transacted market, meaning buyers still pay for utility, location, and land share. In land-scarce wards, land benchmarks can remain strong, and the land component does not depreciate like a building's tax basis. The correct question is whether the unit remains functional and liquid, and whether management and reserves are healthy. Many condominiums that are well-maintained continue to generate rental income and can even increase in value if located in areas with high demand. The notion that japanese properties are rebuilt every 30 years is more myth than market requirement—many reinforced concrete buildings remain valuable and functional well beyond this timeframe.

Why are old buildings still expensive in Minato?

Because in central wards the price is often anchored by land scarcity, infrastructure access, and sustained demand, not by the building's accounting depreciation schedule. Tokyo's published land benchmarks show very high residential land price levels in Minato, and multi-year increases in those benchmarks. If a condominium includes a meaningful land share, the land component persists even as the building ages. The real estate market can also price redevelopment optionality and replacement-cost pressure from rising construction costs, which can keep older homes expensive even when the "book value" of the structure is low. Properties in central tokyo benefit from being in areas like central tokyo where luxury real estate demand remains consistently high, and where property owners can expect strong resale value regardless of building age.

Is Japan different from the US?

Yes in a key mechanical way: foreign buyers often import a US intuition that buildings can be "appreciating assets." In Japan, statutes and practice make it common to treat the building as a depreciable component for tax purposes, while land is the core long-duration asset. The assessed-value system for property tax also differs: Japan uses assessed values designed for tax administration (often anchored conceptually to land benchmarks), not an annual mark-to-market approach. These structural differences are why Japan generates the "depreciation myth"—even when Tokyo market outcomes don't match it. Understanding japan's approach is essential for evaluating whether real estate investments make sense compared to other markets. The value of japanese properties must be evaluated using japan-specific frameworks rather than importing assumptions from other countries.

What is the lifespan of RC buildings?

It depends on which "lifespan" you mean. For tax depreciation, the statutory useful life for residential RC (鉄筋コンクリート造) is 47 years, which many investors mistakenly treat as a physical endpoint. In reality, official housing-policy materials cite research where housing stock survival can extend much longer (for example, wooden housing average survival periods around 65 years in cited research, with RC also modeled with longer survival curves). The practical investor view is: tax life is an accounting schedule; service life depends on materials, maintenance, and governance. Reinforced concrete buildings that are earthquake-resistant and well-maintained can last significantly longer than 47 years, continuing to provide value and rental income to property owners. Many buildings in japan are built to last far beyond their tax depreciation period, especially when proper renovation and maintenance are performed.

Does land in Tokyo ever lose value?

Yes—land can fall in value—but it does not fall as a mechanical depreciation process. Land values respond to demand, zoning/redevelopment expectations, credit conditions, and macro shocks. Official land-price benchmarks show that land prices are heterogeneous: some areas rise, some stagnate, and disaster-affected areas can decline sharply. Tokyo's core land benchmarks have been rising in recent years, but "never down" is not a rule. Investors should track both annual public land benchmarks and transaction evidence rather than assuming single-direction trends. However, the value of the land in central areas tends to be more resilient than in outer areas or rural locations due to sustained high demand and limited supply. Understanding land price dynamics is critical when evaluating property in japan.

Are rural homes really free?

Sometimes—effectively yes. Japan has documented cases where properties are effectively transferred at approximately zero yen because the expected burden (repairs, legal frictions, demolition cost, low liquidity) exceeds local demand. A MLIT-related report documents "0-yen properties" and explains why these assets fail to circulate in standard markets. Importantly, these cases reflect local market failure, not a national rule—and they should not be generalized to properties in central tokyo or other urban areas with strong demand. These near-zero transactions typically involve older homes in areas with lack of demand, often wooden houses in poor condition where the cost to rebuild or conduct renovation exceeds any potential resale value.

What about earthquakes?

Earthquake risk is a real pricing factor, but it does not automatically imply "go to zero" for property value. Markets price risk through building standards, insurance, location-specific hazard exposures, and liquidity. Official land-price materials note that large disaster impacts can cause localized declines; investors should treat hazard exposure as one axis of underwriting, not as an automatic "Japan property depreciates" conclusion. In practice, Tokyo's core demand and land scarcity can coexist with hazard-aware building standards and market risk pricing. Modern japanese properties are earthquake-resistant and designed to withstand the seismic challenges posed by natural disasters in the Pacific Ring of Fire. Buildings are built to last through earthquakes, and the japanese government enforces strict construction standards. Understanding the risks of tsunamis and other natural disasters is important, but these factors are already priced into the real estate market and do not necessarily mean properties will lose value over time.

Does population decline matter for Tokyo?

Yes—but what matters is Tokyo's local population dynamics, not Japan's national average. Official migration data shows strong net inflow into Tokyo, including substantial net inflow into the wards (区部) in 2024 and continued large net inflow in 2025. That inflow supports housing demand and liquidity even as the japanese economy faces national population challenges. Tokyo's vacancy rate is also lower than the national rate, which is consistent with tighter demand conditions and sustained demand for tokyo properties. While japan tend to face demographic headwinds nationally, properties in tokyo benefit from being in a market with continued population growth and economic concentration, supporting rental income and resale value.

Is Tokyo a bubble?

"Bubble" is not a data label; it is a thesis about mispricing relative to fundamentals and financing. Official benchmarks show increased land prices and strong increases in parts of the Tokyo market, while monetary-policy normalization has been underway with the end of low interest rates. The question is how real estate prices relate to incomes, rents, and credit conditions—especially if rates rise faster than expected. A disciplined approach is to separate (1) land benchmark trends, (2) transaction pricing from sources like the Real Estate Economic Institute, and (3) macro-financing conditions. If these decouple sharply (e.g., credit tightens and transactions freeze), risk increases. Current data shows rising construction costs, sustained demand for new homes, and continued appreciation in land values, but investors should monitor whether these fundamentals remain aligned with pricing. Property owners and those making real estate investments should evaluate whether current purchase price levels are justified by rental income potential and long-term value considerations. The tokyo's real estate market and broader japan's real estate market should be evaluated based on structural demand factors, not just recent price trends.