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Property prices in Tokyo are being pushed to raise the bar because of labor shortage, high resource costs, and a sudden increase in easy-earned money. According to Real Estate Economic Institute, the prices for new condos in the greater Tokyo area averaged at around 2.87 million yen per 3.3 sq. meters. In the late 1980s, property prices increased during Japan’s asset bubble. It was the time when some condos are being sold for almost 1 billion yen. In 1990, the average price peaked at around 3.08 million yen before Japan’s asset bubble collapsed. After that, the prices decreased by half. However, low-interest rates and housing loans improved the demand for new condos. The collapse of the bubble would start the long period of slow wage growth and weakness in supply and demand.

The labor shortage in Japan is driving up personnel costs in construction companies. They also had to deal with the raw materials’ high costs. One of the reasons for pushing up the prices is the strong competition for land for construction purposes.

Furthermore, since 2013, the Bank of Japan has maintained a policy that enabled people to earn money easier. According to a chief economist, a lot of financing is flowing into real estate nowadays which will continue until 2021 and will be difficult for Bank of Japan to tighten its policy as the growth of global economy slows down.

Based on the financial report, the financial risk of real estate is still at the safe range, but it is getting closer to the range with higher financial risk. Nowadays, it is still being monitored to look for warning signs in real estate’s status.