JJapan Finance

Report: Tokyo real estate bubble is world’s second riskiest

  • November 25, 2025


Tokyo apparently is the world's second riskiest city, just behind Miami, according to UBS.

Although if you actually read the report… most of the city profile is spent listing reasons why the real estate boom has a good chance of continuing (see below).

From UBS Global Real Estate Bubble 2025 Index:

Tokyo "remains firmly in high bubble-risk territory"

  • "Inflation-adjusted home prices are about 35% higher than five years ago, while real rents and incomes have risen only by low-to-mid single digits.
  • "Tokyo’s population growth has rebounded from the pandemic slump, now increasingly driven by international migration.
  • "That shift is fueling strong demand for high-quality, accessible housing in desirable neighborhoods, pushing rents higher. It is also spurring more offshore demand for residential property as an investment, supported by a relatively weak yen and comparatively attractive yields.
  • "Homeownership is benefiting from persistent financial repression, with favorable financing conditions and strong investment demand.
  • "Further gains in female labor force participation are likely to support household purchasing power, thereby strengthening demand for high-quality condominiums.
  • "However, countervailing forces remain substantial: a shrinking working-age population and an abundance of vacant and stranded properties continue to weigh on the outlook.
  • "Foreign buyers may sustain demand in central districts, but political backlash against overseas investment is intensifying."

by Bob_the_blacksmith

10 comments

  1. Fuck sake

    Guess I had to wait for it to pop

    Man all I want is a decent apartment so my yearly trip cost less

  2. > ⁠”However, countervailing forces remain substantial: a shrinking working-age population and an abundance of vacant and stranded properties continue to weigh on the outlook.

    Not sure about this point…

  3. the pop will be a nankai trough related pop. EDIT actually a major earthquake might ultimately make it worse if a lot of homes are destroyed, increasing the value of whats left.

  4. What’s most likely to happen is what is happening in almost every major western city, which is a sustained affordability crisis.  The bubble likely won’t pop until some large financial crisis which does not come often. I would not hold my breath waiting for prices to come down. 
    The government had years to put controls in place, and like the west, did nothing. Now it is very slowly considering putting in some controls that will be much too late to have any meaningful impact. 

  5. It’s not even the price that will pop. If interest rate keeps going up many Japanese families will not be able to afford their mortgages.

  6. They somehow seem to have missed every major city in Australia, lol. Not sure I put much faith in this report.

  7. Tokyo is extremely affordable compared to other cities worldwide. Sure there are central districts that are overpriced – but there’s no reason to focus on those bad options when everyone has high quality accessible good options.

    Prices are up, but worldwide it’s like Tokyo is one of the few cities not in a bubble.

    Increasing interest rates substantially would be a destabilizer. But there’s no indication of that happening and no reason to believe it’s more likely here than anywhere else around the world.

  9. Miami is a scary one. Hurricanes mixed with tides rising is a nightmare combo for insurance.

  10. These two statements seem to contradict each other:

    “It is also spurring more offshore demand for residential property as an investment, supported by a relatively weak yen and comparatively attractive yields.”

    “Inflation-adjusted home prices are about 35% higher than five years ago, while real rents and incomes have risen only by low-to-mid single digits.”

    Second statement implies that yields should be much worse than before.

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