Is Tokyo at Risk of Becoming Unafforadable?

  • Around the world, skyrocketing real estate prices have rendered many of the biggest cities around the world completely unaffordable. In the United States, people escaping high rents in places like Austin, Texas made a move for Spokane, Washington during the pandemic just to see the city respond to the influx of people looking for more affordable places to live by increasing home prices 60 percent. Gentrification in cities like Los Angeles has seen families that had lived in their neighborhoods for generations move out to the outskirts of the city, making their commuting times even longer. Things are not better in Europe. Everyone is familiar with the horror rent tales in cities like London and Paris. Even Berlin, long recognized as the most affordable capital of Western Europe, has had problems with housing becoming more and more expensive.

    by Martin Danker

    Tokyo is often seen as one of the most expensive cities in the world, and if you are buying groceries it can certainly feel like that when you see how much some fruits can cost. I’m talking about real grocery stores, where strawberries, apples, and mangoes cost far more than what you see in other countries, by the way, not places like Sembikiya which have outrageous prices since Sembikiya is not a grocery store, and their perfect $300 muscat melons are not intended for daily consumption, they are meant as gifts.

    But while Tokyo’s grocery expenses can be on the higher side, housing is not. In fact, rent in Tokyo is one of the many factors that makes foreigners decide to stay because, simply speaking, they would not be able to have the same standard of living in their hometowns. There are definitely some cons when it comes to finding a place in Tokyo, from the lack of storage to the downright infuriating process of trying to find a place that allows foreigners. If you are a single non-Japanese woman, brace yourself for some horrifying misogynistic explanations as to why you did not get the apartment you had wanted…

    All in all, though, once you have a place to live, seeing how much (or how little) your rent is compared to what you would pay in some other cities of the same caliber. Places to live that are below 200,000 yen a month, and some that are even around 100,000 yen a month, can be a very common sight in Tokyo; and while cheaper, more spacious homes can be found outside of the 23 wards of Tokyo (think of places like Machida or other adjacent cities that form part of the metropolitan area like Sagamihara in Kanagawa or Omiya in Saitama), you can also find affordable places in the city center.

    However, something has been happening to Tokyo that had not happened since the time of the infamous bubble: homes are becoming very expensive. For the 19th month in a row, the asking price for an apartment in Tokyo has gone up. Prices have increased 70 percent over the past decade, and 11 percent just in the last year alone.

    Despite the population of Tokyo contracting due to the pandemic, asking prices have been on an upward trend. One of the reasons is that the population contracted because many foreigners who lived in Tokyo decided to move back to their home countries. However, many Japanese actually ended up moving to Tokyo during the pandemic.

    Adding to the burden of the rising real estate prices, the Japanese yen is weakening. The Japanese yen has always been a haven currency for investors, and Japan is a country that rarely experiences inflation. In fact, the current inflation rate is only .5 percent, the lowest among G20 countries; but the weakening yen is bringing inflation to the country. During the tenure of former Prime Minister Abe, a weakened yen was part of the administration’s so-called “Abenomics” to increase exports, but in 2022, Japanese exports don’t need as much help of a weaker yen because manufacturing has gone to other countries while Japan manufactures higher-end products that don’t real benefit that much when the yen is weaker; and since Japan imports many products its citizens and residents need, a weaker yen is making prices go up.

    First came the restaurants. Since imported produce was the first to go up, restaurants across the country had to increase prices. Luxury restaurants, long seen as the best fine dining places in the world in terms of value (lunch is usually half the price of dinner and way lower than what you’d spend at Michelin-starred restaurants in Europe and the United States), now have prices that are similar to those of their European equivalents; and places like Matsuya and Yoshiynaya with their stably cheap beef bowls, also had to increase prices. Recently, McDonald’s also made headlines after it announced that some burgers would be more expensive.

    For those not going out, inflation is also threatening their livelihood. Common products like detergent are going up, and electricity is increasing as well. While Japanese salaries were world-leading decades ago, now they are not. So to many residents, the stability of the yen on the world stage is very important so that they can continue living the way they are used to.

    All of that brings us the title in question: is Tokyo at risk of becoming unaffordable? Well, since using real estate apps like Suumo or Goodroom these days provide fewer of those truly affordable places one could rent in the center of Tokyo, and with the risk of inflation caused by a weakening yen looming, Tokyo could indeed become too expensive for many.

    *Featured Image by arkhills_official on Instagram
    : arkhills_official/