Japanese people in their 20s, who once held back from buying homes for fear prices would fall, have changed course. They are now hurrying to buy, driven by anxiety that waiting longer will leave them priced out. The homeownership rate among households headed by someone 29 or younger topped 40% last year for the first time, a record high. With home prices climbing and interest rates beginning to rise, more young buyers are taking out mortgages stretching as long as 50 years.
Homeownership Rate for Under-30s Tops 40% for First Time
Japan's Sankei Shimbun reported on the 6th, based on its analysis of the Ministry of Internal Affairs and Communications' household survey, that the homeownership rate among households of two or more people headed by someone 29 or younger stood at 40.7% last year. That is the highest level since the data series began in 2000.
In the early to mid-2000s, the rate for these households hovered in the low 20% range. It fluctuated afterward before holding in the low 30% range from 2015 to 2023, then climbed sharply starting in 2024 and crossed the 40% line for the first time last year.
Young Japanese were once relatively reluctant to buy. After the collapse of the bubble economy in the early 1990s shattered the belief that property prices only go up, many preferred renting to shouldering the risk of falling prices.
The picture has now reversed. As home prices keep surging and the Bank of Japan's rate increases raise the prospect of higher mortgage rates, anxiety has spread that delaying a purchase means paying both a steeper price and a higher rate.
Average New Apartment in Tokyo Area Tops 100 Million Yen
Japanese apartment prices are indeed rising steeply. According to the Real Estate Economic Institute, the average price of a newly built apartment sold in the greater Tokyo area in the first half of this year exceeded 100 million yen (about 860 million won) for the first time.
The Kinki region, which includes Osaka, averaged 54.53 million yen, the second-highest level on record after the first half of last year. That figure tops even the 52.21 million yen average of the first half of 1991, at the height of the bubble economy.
Lenders are also rolling out ultra-long mortgages with repayment periods stretching up to 50 years to meet demand from younger buyers. By lowering monthly principal and interest payments, the products allow young people with modest incomes to buy expensive homes. Sankei Shimbun said the spread of these ultra-long loans is another factor accelerating home purchases among younger generations.
A view of housing as a means of building wealth rather than simply a place to live is also spreading. A 2022 survey of apartment prices near railway stations in the greater Tokyo area found that at 389 of 398 locations, resale prices were higher than the original presale prices.
Buying Homes Worth More Than Eight Times Annual Income
The problem is that home prices are outpacing income growth, leaving more households taking on heavy debt to buy.
According to a Recruit survey, the share of buyers in the greater Tokyo area who purchased a newly built apartment priced at more than eight times their household's annual income rose from 7.1% in 2009 to 20.4% in 2024, roughly a threefold increase. Given that a home price of six to seven times annual income is generally considered manageable, that means more households are carrying a considerable burden.
Debt among households of two or more people headed by someone 29 or younger has held at 7 million to 8 million yen (about 60 million to 70 million won) in recent years. In the early 2000s, these households had more savings than debt, but that has now flipped, with debt exceeding savings.
Rising rates are another variable. Japan's Financial Services Agency found that about 74.5% of mortgage borrowers chose floating rates. If rates climb further, the repayment burden on young homebuyers could grow.
Young Japanese who once avoided buying because they feared prices would fall have now swung to buying in a hurry because they fear prices will rise further. But as the gap widens between home prices, incomes and debt, some warn the rush to homeownership could turn into a financial strain on young households.
