Tokyo takes second spot in UBS Global Real Estate Bubble Index for 2026
Tokyo remains one of only two housing markets classified as facing high bubble risk in the UBS Global Real Estate Bubble Index 2026, released September 22nd, as home prices continue to outpace longer-term income growth despite higher interest rates in Japan.
Tokyo recorded a bubble-risk score of 1.54, second only to Zurich at 1.69 among the 23 cities covered by the report. Its score was almost unchanged from a year earlier. UBS defines scores above 1.5 as indicating high bubble risk.
Courtesy of the full press release linked at the bottom of this article.
Inflation-adjusted Tokyo home prices rose 6% year on year through the second quarter of 2026. Real rents increased at the same pace, while UBS said higher interest rates have yet to materially affect the housing market.
The longer-term gap is wider. UBS estimates that Tokyo home prices, adjusted for inflation, are about 50% higher than seven years ago. That is roughly twice the increase in real rents and about five times the growth in real incomes over the same period.
Affordability is shifting demand
The widening gap between home prices and household incomes is becoming a constraint on local demand.
UBS places Tokyo among the markets where a skilled service worker would need more than 10 years of average income to buy a 60-square-meter apartment near the city center.
Only Hong Kong ranks clearly higher on the report’s price-to-income measure.
Courtesy of the full press release linked at the bottom of this article.
The report says higher housing costs are excluding more prospective local buyers and redirecting demand toward less expensive suburban locations and rental housing.
That shift is significant in a market where central-city condominium demand is also supported by overseas capital. UBS says foreign investors continue to seek premium apartments in central Tokyo, while international migration remains important to maintain the city’s population growth.
UBS also points to stronger nominal income growth and further gains in female labor-force participation as factors that could support household purchasing power and demand for higher-quality condominiums.
Further Reading
UBS Global Real Estate Bubble Index 2026
