Tokyo ranks second in UBS Global Real Estate Bubble Risk 2025 report
- Adam German
- 13 hours ago
- 2 min read
According to the UBS Global Real Estate Bubble Index 2025, Tokyo ranks second worldwide for real estate bubble risk, with a score of 1.59 placing it in the “high risk” category.
Courtesy of UBS press release, linked at the bottom of this article.
UBS says that although the city remains vulnerable, imbalances have eased slightly from last year as construction spending slowed and household borrowing growth moderated.
Key Takeaways
Tokyo ranks 2nd globally in the 2025 UBS index with a high bubble risk score of 1.59
Home prices are up 35% in real terms over the past five years, while rents and incomes rose only modestly
The price-to-rent ratio remains among the world’s highest at roughly 30 years of rent
Foreign investors and international migration continue to support demand
UBS warns that aging demographics and vacant housing could limit long-term price gains
Prices Continue to Outpace Rents and Incomes
The report finds that inflation-adjusted home prices in Tokyo are about 35 percent higher than five years ago, while real rents and household incomes have risen only modestly.
Courtesy of UBS press release, linked at the bottom of this article.
Over the past year, prices climbed more than 5 percent - one of the fastest rates among all cities surveyed. UBS notes that this persistent price growth has widened the affordability gap, with an average skilled worker needing more than ten years of income to purchase a 60-square-meter apartment near the city center, a level comparable to London and Paris.
Tokyo’s Price-to-Rent Ratio Defies Global Trends
UBS highlights that Tokyo’s price-to-rent multiple remains among the highest globally, at roughly 30 years of rent needed to buy an equivalent property.
Courtesy of UBS press release, linked at the bottom of this article.
While most Asian and European cities saw ratios decline in 2025, the study points out that Tokyo was one of the few markets where this figure continued to rise, signaling resilient investment demand despite limited affordability.
Migration and Investment Support Market Strength
The report attributes Tokyo’s continued strength to structural and demographic factors. UBS observes that population growth has rebounded since the pandemic, now fueled more by international migration.
Related Content: Get a free market appraisal for your Tokyo property. Even if you aren’t looking to sell now, knowledge of current value never hurts. Click here to learn more.
This inflow, combined with a weak yen and relatively attractive yields, has bolstered foreign investor interest. The study adds that low real borrowing costs and rising female labor participation have supported household purchasing power and demand for high-quality condominiums.
Structural Challenges Could Limit Further Gains
Despite these drivers, UBS cautions that Tokyo faces persistent structural headwinds, including a shrinking working-age population and a large stock of vacant properties.
The report also warns that growing political unease toward foreign real estate investment could begin to weigh on demand.
Even so, UBS concludes that Tokyo remains a leading example of an urban market likely to attract future growth as rural areas continue to lose residents and economic activity.
Further Reading:
UBS Global Real Estate Bubble Index 2025
