Tokyo used condominium prices fell for the first time in more than two years in August, dropping 0.2% to ¥112.74 million ($714,000) according to Tokyo Kantei Co. Rising mortgage rates, driven by the Bank of Japan’s rate hikes and tighter credit signals, are dampening buyer sentiment. The decline began in central Tokyo’s pricier districts, with the six central wards seeing a 0.7% drop—marking four straight months of declines. The Financial Services Agency is tightening oversight of real estate lending amid concerns over price overshoot fueled by domestic and international investors chasing capital gains. Masayuki Takahashi, senior principal researcher at Tokyo Kantei, expects price adjustments to continue through year‑end, spreading beyond central areas to surrounding regions.

The report highlights a broader market shift as higher borrowing costs weigh on demand. Investors’ rush for capital gains appears to be losing momentum, prompting a correction in the city’s condominium sector. Regulatory scrutiny is increasing, signaling further pressure on property valuations.