With Property Prices Continuing to Rise, Now Is the Time to Define Your Core Buying Strategy.

Condominium prices—both new and resale—have reached unprecedented levels.

A variety of factors lie behind this surge, and it is difficult to envision a simple scenario in which prices fall in the near term. Given the high likelihood that prices will continue to rise over time, it is reasonable to conclude that purchasing a condominium sooner rather than later remains a sound decision.

Rents, too, are increasing. If buyers delay their purchase, housing costs will only continue to climb—whether through higher rents or higher purchase prices. The critical question, therefore, is what compromises must be made in order to buy within one’s budget. Determining this in advance is essential.

Even after deciding to buy, the range of available options depends heavily on one’s overarching strategy. At its core, this strategy comes down to whether asset value is a priority. In this context, asset value refers to the degree of price depreciation in one’s home that one is willing to accept.

If asset value is not a priority, then some degree of depreciation must be accepted as inevitable. For example, married homeowners may be required to compensate for a decline in property value with cash in the event of a divorce. If the proceeds from selling the property are insufficient to fully repay the outstanding mortgage, the shortfall must be covered in cash. If that shortfall amounts to ¥10 million, then ¥10 million in liquid funds would be required.

Some may believe that divorce will never apply to them, and that is a perfectly understandable view. However, the reality is that divorces account for approximately 35% of marriages, making it impossible for anyone to say with absolute certainty that it will never occur.

If asset value is not a priority, buyers should consider looking to suburban areas that align with their budget. There is also no need to limit oneself to condominiums; detached houses are a viable alternative. Building a custom-designed home tailored to personal preferences is another option. In such cases, buyers can approach their housing decision with relatively few constraints.

By contrast, for those who place a high priority on asset value, purchasing a condominium rather than a detached house is effectively the only realistic option. In that case, the most important guiding principle is to buy as close to the city center as possible.

What You Need to Watch Out for When Sacrificing Space and Settling for a Smaller Unit.

Properties in prime locations naturally command higher prices. If a property is unaffordable, it serves no practical purpose, so buyers must adjust their requirements until the price falls within reach. The most direct way to do so is to reduce the size of the unit.

That said, there are clear limits to how much size can be sacrificed. In Japan, a property must have a registered floor area of at least 40 square meters to qualify for the home mortgage tax deduction. Properties below this threshold are treated as investment properties rather than owner-occupied residences, which can lead to a sharp decline in resale value.

It is important to note that the floor area referenced here is the registered floor area recorded in the property registry, which differs from the exclusive-use area commonly shown in sales brochures. The registered floor area measures the space inside the interior walls, whereas the exclusive-use area is calculated from the centerline of the walls and is therefore slightly larger.

As a result, even units advertised with an exclusive-use area of around 43 square meters require careful verification to ensure that the registered floor area exceeds the 40-square-meter threshold. Buyers should ask their real estate broker to confirm this point during the transaction process.

In a recent private consultation, a family of three decided that the mother and child would continue living in a suburban rental, while the father purchased and lived alone in a small condominium in the city center. Because family-sized units in central locations were beyond their budget, they opted for a single-occupant unit and adopted a “weekend marriage” arrangement as a practical compromise. The fact that such decisions are now being seriously considered highlights the degree to which housing affordability has become constrained.

Another way to lower the purchase price is to compromise on the age of the building. However, one condition that must not be compromised is compliance with Japan’s post-1981 seismic standards.

Buildings approved on or before May 31, 1981 fall under the old seismic standards, while those approved on or after June 1, 1981 are subject to the new seismic standards. In Japan, seismic requirements under the Building Standards Act have been revised after major earthquakes, as the extent of structural damage has varied significantly depending on the standards in effect at the time of construction.

From a lender’s perspective, financing a property that could become uninhabitable in a major earthquake entails significant risk. If the value of the property used as collateral is severely impaired, recovery becomes difficult. For this reason, compliance with the new seismic standards is, in principle, one of the essential prerequisites for obtaining a housing loan.

For this reason, it is essential to verify the date on which the condominium’s building permit application was approved. Buyers should request a copy of the official building confirmation notice from the seller and confirm the approval date. Even if a property was built under the old seismic standards, it may still qualify for a housing loan under the Flat 35 program if a Seismic Standards Compliance Certificate can be obtained. However, because such loans typically carry higher interest rates, these properties tend to sell only at discounted prices. Moreover, the pool of potential buyers is limited, making resale more difficult. For these reasons, this option is generally not considered practical.

Another way to lower the purchase price is to forgo land ownership and opt for a leasehold property. However, buyers should be aware that unless the leasehold property is located in a prime area.

Can a 30-Year-Old Property Still Be Sold Ten Years From Now?

As a general guideline for the age of resale properties, units built in or after 2001 are often recommended. The reason is that this period includes the years from 2001 to 2003, when condominium prices were at their most affordable. It also serves as a convenient cutoff, often referred to as “21st-century properties.” Properties built before this period tend to have had higher initial prices at the time of completion, while their unit sizes were not necessarily larger.

Around 2001–2003, there was a large supply of new condominiums. Land prices and construction costs were low, resulting in properties that were larger and offered better livability. One of the most common concerns when purchasing a 20-year-old condominium from this era is whether it will still be sellable once it reaches 30 years of age in another ten years—a question I am frequently asked. Here, I aim to address that concern.

The average building age of resale condominium transactions in Osaka Prefecture was 23.1 years in 2019, rising to 25.5 years in 2024. This represents an increase of 2.4 years over five years, meaning that for every calendar year that passes, the average age of transacted properties effectively increases by about 0.48 years. This is largely because new condominium supply has fallen to only a fraction of previous levels, naturally reducing the number of relatively new resale properties available on the market.

Looking ahead, new condominium supply is expected to continue declining, suggesting that this trend—where one year of time results in an average increase of roughly 0.48 years in the age of transacted properties—will persist.

As a result, in ten years’ time, the average age of resale condominiums being traded is likely to rise by around 5 years, exceeding 30 years. In other words, selling a condominium that is 20 years old today when it reaches 30 years of age in ten years would place it squarely at the market average. By that point, 30-year-old properties will be routinely traded.

Even if transactions continue to occur, the key concern is price. It would be problematic if older properties could only be sold for a negligible amount. Over the past decade, average resale prices have risen by approximately 54%. Properties aged 31 years or older have also seen price increases of around 50%. While this lags behind the 75% increase for properties up to five years old and the 63% increase for those up to ten years old, older properties have by no means been excluded from the broader upward trend in market prices.

There is no evidence to suggest that older properties inevitably suffer sharp price declines. This resilience is likely supported by the strong locations and relatively generous unit sizes typical of properties completed between 2001 and 2003.

Above all, the worst decision is to delay purchasing a home altogether. Buyers should move forward with their purchase plans within the range of compromises they are able to accept.

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