What's Happening in the Tokyo Central 3 Wards' Condo Market After 73 Months of Decline? The Current Condo Market You Must Not Misunderstand

From Price Appreciation to a Focus on Liquidity

According to the REINS Tower Report by the Eastern Japan Real Estate Distribution Organization, the contract price per square meter for pre-owned condominiums in the Tokyo metropolitan area decreased in May 2026 compared to the same month last year, marking the first decline in 73 months. The pre-owned condo market in the Tokyo metropolitan area had seen continuous price increases since the COVID-19 pandemic, but this data suggests that a change may be starting to occur.

Particularly striking is the data by area released by the same organization, which shows a relatively large drop in contract price per square meter in the central three wards (Chiyoda, Chuo, and Minato), areas with high transaction volumes.

Historically, central Tokyo has seen price increases supported by diverse demand, not only from wealthy domestic individuals but also from overseas investors and high-income dual-income households. However, the market appears to be shifting from one where "prices rise" to one where "the balance between price and liquidity is questioned."

Inventory Accumulation in Symbolic Condominiums

The map below visualizes the inventory trends for symbolic, high-priced condominiums with an average price of 80 million yen or more.

Source: Processed by Fukushima Research from Google Maps

Red plots: Decreasing inventory trend (high liquidity)

Yellow plots: Stable inventory (standard liquidity)

Blue plots: Increasing inventory trend (decreasing liquidity)

Looking at this distribution, blue plots are noticeable in symbolic condominium groups that have driven price increases, such as in Minato Ward and the bayshore areas of Chuo Ward.

These areas have seen significant demand from investors and inflows of foreign capital, in addition to end-users. During the price appreciation phase, demand outstripped supply, leading to quick sales whenever units were listed.

However, currently, despite an increase in the number of units listed, the number of concluded contracts is not growing, resulting in an accumulation of inventory.

This is not simply a matter of "too many condos available."

Rather, it is likely a situation where a gap has emerged between the prices anticipated by market participants and the prices that potential buyers are willing to accept.

Liquidity Maintained in Surrounding Residential Areas

Interestingly, even within the same central Tokyo areas, yellow plots are frequently observed in residential areas surrounding these symbolic condominiums.

This indicates that demand has not disappeared from the market as a whole, and a certain level of liquidity is being maintained.

For example, while inventory is increasing for ultra-luxury tower condominiums in the bayshore area, transactions remain relatively stable in nearby residential areas and for mid-priced condominiums.

This is less an indication of a weakening market and more a result of buyers making more discerning decisions regarding prices.

In other words, the market may be transitioning from one where "any property sells" to one where "properties at appropriate prices are selected."

Market Changes Visible from Inventory Trends

Furthermore, we randomly selected symbolic condominiums with increasing inventory and analyzed the relationship between sales prices and inventory trends. The following explains an example.

Source: Fukushima Research

The blue plots in the graph above indicate estimated sales, and the orange plots indicate units for sale.

The graph below shows the inventory trend.

For the property in question, inventory remained at extremely low levels from July 2021 to around May 2024.

Low inventory means fewer units circulating in the market, thus limiting the number of concluded sales. Consequently, the number of blue plots indicating estimated sales was also low.

However, during that period, units sold quickly once they hit the market, indicating very high liquidity.

The situation began to change after June 2024.

Source: Fukushima Research

Market inventory gradually started to accumulate, but the blue plots indicating estimated sales did not increase significantly.

This means that newly listed units are not being sold and are remaining as inventory.

End of Zero Interest Rate Policy and Changes in Market Sentiment

This timing may not be coincidental.

In July 2024, the Bank of Japan effectively ended its zero-interest rate policy.

Japan's real estate market has benefited from an ultra-low interest rate environment for a long time. Consequently, not only mortgage borrowers but also real estate investors and asset holders have made investment decisions based on the assumption that "low interest rates would continue."

However, as the market enters a phase of rising interest rates, concerns about future increases in mortgage burdens and a reassessment of expected yields have begun to change the sentiment of market participants.

Furthermore, inventory increases accelerated around January 2026.

This period saw the policy interest rate rise to around 1%, coinciding with a slowdown in the Chinese economy and changes in demand from Chinese investors and inbound tourism.

This may have led to a weakening of some investment demand that had been supporting the central Tokyo tower condominium market.

Adjustments Are Occurring in "Specific Price Segments," Not the "Entire Market"

Looking at the property in question, based on actual sales performance, the price per tsubo around July 2024 can be considered a peak.

However, as market conditions became tougher, sellers continued to set prices based on previous record highs.

As a result, these properties are not being accepted by the market, leading to inventory buildup.

It is possible that some price adjustments will occur for such properties in the future.

However, these adjustments are unlikely to affect the entire market and will likely be concentrated in a few symbolic condominiums where prices have risen excessively.

This is because demand still exists in residential areas and areas with high living needs where properties are available at prices that end-users can afford.

Towards a Market of "Normalization," Not "Collapse"

Recently, there has been an increase in the use of sensational terms like "real estate bubble burst" and "condominium price crash."

However, what can be read from this data is not a collapse of the entire market, but signs of price adjustments in some high-priced condominiums.

It can even be seen as a process where the market, which had become difficult to purchase due to excessive price increases, is gradually approaching levels affordable for end-users.

The demand for housing in central Tokyo has not disappeared. The advantages of the city center, such as population concentration, employment concentration, redevelopment, and transportation convenience, still exist.

What is important is not to take an extreme view like "all central Tokyo condos will fall" or "condo prices will crash," but to carefully assess the liquidity and supply-demand relationship for each area and property.

The future pre-owned condominium market in Tokyo may transition to an era where liquidity is valued over price appreciation rates. Inventory movements are one of the most important indicators reflecting this change.