The View | Asia’s housing affordability squeeze shows no signs of slowing

Name: Inflation at 41-year high in Tokyo as food prices soar across Japan
Uploaded: 2025-12-08T08:31:35.000Z
Duration: 1 min 41 s
Description: Inflation at 41-year high in Tokyo as food prices soar across Japan

Some of the sharpest increases in property values are in economies facing major headwinds or those suffering from an acute shortage of affordable housing

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Nicholas Spiro

Published: 4:31pm, 8 Dec 2025Updated: 5:23pm, 8 Dec 2025

Every quarter, Knight Frank publishes an index tracking the movement of prime residential prices and rents in leading cities around the world. Although the index is just a snapshot that should be treated with caution given significant differences in the performance of submarkets within cities, its findings are nevertheless revealing.

In the sales market, five of the six cities with the fastest growth in prices last quarter were in Asia. In Tokyo, prices rose a staggering 56 per cent on an annualised basis, outpacing growth in Seoul, Bengaluru, Mumbai and Singapore.

Tokyo was also the best performing rental market, with prime rents up 9.6 per cent. In fact, rents increased 30.2 per cent in the past five years. While rental growth was stronger in Sydney and Singapore, the property boom has had an outsize impact in Japan, where the real estate sector was in the doldrums for decades following the bursting of the late 1980s asset bubble. The return of inflation, coupled with the dramatic fall in the yen, has resulted in a cost-of-living crisis.

Last month, Tokyo’s government launched an affordable housing fund that will provide rental flats to families at a 20 per cent discount to market rents. While property values in Japan are rising rapidly, real wages fell 0.7 per cent from a year earlier in October, the tenth straight month of declines, putting pressure on the government to help cushion the impact of inflation on households.

Cost-of-living pressures in Japan are part of a wider affordability squeeze in Asia’s housing markets. Although the deterioration in affordability is a “universal theme”, with residential properties across 40 countries “less affordable than at any time since 2008”, according to JPMorgan, Asia is at the sharp end of the crunch.

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Inflation at 41-year high in Tokyo as food prices soar across Japan

A report on housing affordability in 41 cities across the Asia-Pacific by the Urban Land Institute (ULI) in July said the region faced a double whammy of declining affordability and poor accessibility. “In developed markets, homes are unattainable because they are too expensive, however in larger developing markets such as India and Indonesia, there remains a shortage of basic housing for millions of people”, ULI said.

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