The apartment rental market in Japan is complex and challenging. Each apartment is a unique and multidimensional property that is differentiated into many attributes that vary in quality and quantity. Believing that rental prices are solely determined by supply and demand is somewhat naive as rent within any particular area is set by the landlord, whose decision is based on a variety of economic and social factors.
One of the economic factors affecting rental prices in Japan are the interest rate and income level. When tenants begin receiving an increased income, landlords often raise rent prices to take advantage of their tenants increased purchasing powers.
Population is a major non-economic factor that affects the rental prices in Japan. An increasing population leads to a higher demand for accommodation, which causes rental prices to rise. Many apartment amenities such as water system, gas, and shared facilities play an important role in determining rental prices in Japan.
The following factors have a significant impact on the level of rent in Japan; the apartment buildings age, the location, the amount of bedrooms, and available bathrooms. Landlords tend to raise the rent for apartments located in popular and convenient areas.
However, according to a recent study by Tokyo Kantei, the apartment buildings age actually has a larger influence on rent in comparison to a buildings distance to the nearest train station. The difference in rent between an apartment that is less than 3 years old and and apartment that is over 30 years old, is between 30 to 40%. In comparison, the difference in rent between an apartment less than a 3 minute walk from the station compared to a location 15 minutes away is around 20%.
The average rental apartments in Japan have recently grown exponentially, however recent data suggests that the number of new apartments coming into the rental market are having a strong influence on rent, whereas many of the older buildings are remaining unchanged.Sources: