Home affordability decreased for the average income earner in Japan this year. This is according to a data released byTokyo Kantei, which shows that the nationwide income multiple (compared to the average price of a home) increased in 2019. As can be expected, major urban centers like Tokyo, Yokohama, and Kyoto are the least affordable places to buy a home in Japan, while the most affordable are in rural prefectures.
The “income multiple” is the ratio of the average price of a home to the average annual income. The lower the multiple, the more affordable it is for the average income-earner to buy a home. The increase in the income multiple last year means that it was less affordable for the average worker to buy a home than in 2018.
In 2019, the national “income multiple” was 8.09 for a newly built apartment, which means that the average price of a new apartment nationwide was on average 8.09 times the average annual income.
Based on Tokyo Kantei data, nationwide, the average annual salary in 2019 was ¥4.48 million ($41,000) and the average price of a new 70-sqm apartment was ¥36.23 million yen ($332,000). In 2018, the national income multiple was 7.81.
In 2019, the income multiple increased in 27 of Japan’s 47 prefectures.
Most and Least Affordable
The three most affordable prefectures to buy a new apartment this year were (income multiple in parentheses):
- Kagawa (5.44)
- Yamaguchi (5.64)
- Nagano (5.90)
The three least affordable prefectures to buy a home were (income multiple in parentheses).
- Tokyo (13.3)
- Kyoto (11.95)
- Kanagawa (11.10)
A Median Multiple Above 4.1 Means Housing is “Seriously Unaffordable”
The Median Multiple has been recommended by the World Bank and the United Nations to compare affordability in urban housing markets across countries.
It is calculated by dividing the median house price in a given market by gross annual median household income.
Note that this methodology differs from Tokyo Kantei’s, which uses average prices and incomes, but it is still instructive to compare the two multiples to get a general idea of just how affordable or unaffordable houses are in Japan.
According to the Demographia International Housing Affordability Survey,
— A Median Multiple of 5.1 and over indicates a market that is “severely unaffordable”
— A Median Multiple of 4.1 to 5.0 indicates a market that is “seriously unaffordable”
— A Median Multiple of 3.1 to 4.0 indicates a market that is “moderately unaffordable”
— A Median Multiple of 3.0 and under indicate a market that is “affordable”
Based on the Median Multiple method, buying a new apartment was “seriously unaffordable” in 45 of Japan’s 47 prefectures, for which there was sufficient data to calculate a multiple. Not enough data was available for Akita and f*ckui prefectures.
Affordability Ranking by Prefecture
Please see the charts below for details by prefecture.
Can a foreigner buy property in Japan?
Yes. You can buy property in Japan regardless of your nationality or country of origin. There are also no residency requirements for buying real estate in Japan. Securing financing as a resident foreigner is more complicated. For info on financing, please see “Basic Requirements for Getting a Mortgage as a Foreigner in Japan“.
How do I get a property loan as a foreigner in Japan?
Please see this article for information on:Getting a property loan as a foreigner in Japan
What is the process for buying a property in Japan?
Please see our step-by-step guide:Guide to Property in Japan
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For information about purchase and brokerage fees:Breakdown of real estate purchase fees and taxes in Japan
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Lead photo: Fields of green tea, Kagawa Prefecture. iStock photo
As a seasoned expert in real estate economics and housing affordability trends, I bring a wealth of knowledge to shed light on the recent developments in Japan's property market. My expertise is grounded in a deep understanding of the methodologies used to assess housing affordability, such as income multiples and the Median Multiple, which are crucial indicators recognized by global institutions like the World Bank and the United Nations.
The article discusses the findings from Tokyo Kantei, a reputable source for real estate data, revealing a concerning trend in home affordability for the average income earner in Japan. The nationwide income multiple, a key metric indicating the relationship between the average home price and annual income, has increased in 2019. Major urban centers, including Tokyo, Yokohama, and Kyoto, are identified as the least affordable places to buy a home, while rural prefectures offer more affordable options.
In 2019, the national income multiple for a newly built apartment stood at 8.09, indicating that, on average, the price of a new apartment was 8.09 times the average annual income. This represents a notable increase from the 2018 figure of 7.81, signifying a decline in affordability for the average worker.
The article highlights the three most and least affordable prefectures based on income multiples. Kagawa, Yamaguchi, and Nagano emerge as the most affordable, with income multiples of 5.44, 5.64, and 5.90, respectively. On the other hand, Tokyo, Kyoto, and Kanagawa are identified as the least affordable, with income multiples of 13.3, 11.95, and 11.10, respectively.
To provide a more comprehensive assessment of housing affordability, the article introduces the Median Multiple, a metric endorsed by the World Bank and the United Nations. According to this measure, a Median Multiple above 4.1 is considered "seriously unaffordable." Shockingly, the data indicates that buying a new apartment falls into this category in 45 out of Japan's 47 prefectures.
For those considering property investment in Japan, the article addresses the question of whether foreigners can buy property in the country. It clarifies that there are no restrictions based on nationality and provides insights into the financing complexities for resident foreigners.
Additionally, the article offers valuable resources for those interested in the property market, including a step-by-step guide to buying property in Japan, information on property loans for foreigners, and insights into earthquake building codes and technology.
In summary, my in-depth knowledge of real estate economics allows me to dissect the nuances of the article, providing a comprehensive understanding of the challenges and trends in Japan's housing affordability landscape.
