Japan’s residential property prices continue to rise, despite weak demand and a projected economic slowdown, according to the Land Institute of Japan. While Japan is not typically on the radar for UK property investors, there are still no legal restrictions on foreigners buying and owning real estate property in the country.

During 2022, the nationwide residential property price index rose by 7.5% (3.4% inflation-adjusted), an acceleration from y-o-y rises of 6.3% in 2021, 3.1% in 2020, and 0.6% in 2019.

House price growth has also continued in the first half of this year, but there are wide price variations in terms of location and property type.

In the past 10 years, residential property prices have increased by around 35% in Japan, which is quite surprising considering that the population of the country has decreased by around 3m people during that time. Also, urban land prices have hardly increased in the past 20 years in Japan and they are actually around one-third as much as the cost of land at the peak of the last bubble in 1991.

However, housing starts in Japan have been less than 900,000 units per year since 2008, compared to more than 1.1m per year in the decade before 2008 so construction is down around 200,000 units per year to balance out the loss in population of around 300,000 people per year.