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If you're considering buying a home in Tokyo, should you choose a house or an apartment (condo) ? Which is the best option?

Tokyo apartment and house

When thinking about buying a home in Japan, it's common to choose between a house and an apartment. Foreigners can purchase real estate in Japan just like Japanese citizens, but if you're not familiar with the real estate market, you might wonder, "In Tokyo, are houses or apartments more popular?" or "Are houses more expensive?" These questions can make the decision difficult.

When it comes to purchasing a home in Tokyo, a major metropolis, which is the better choice: an apartment or a house? This debate is common, but both options have their own advantages, making it hard to declare one as definitively better than the other.

Since real estate isn't something you can easily replace, it's important to choose a home that matches your priorities and lifestyle. This article provides tips for foreigners looking to buy a home in Tokyo, helping you choose the right type of property for your needs.

1. Houses and Apartments (condos) in Japan

1-1 About Houses in Japan

A detached house typically refers to a standalone residence built for one household. It is physically separated from other houses, with no shared walls or ceilings, offering advantages in terms of noise and privacy over shared housing. In a detached house, you own both the land and the building. You can enjoy gardening, keeping pets, and remodeling as you wish. Unlike apartments, there are no monthly maintenance fees, but you need to save for large expenses like roof and exterior repairs or replacing worn-out facilities. These houses are often made of wood or light steel. Bathrooms usually have a combined tub and shower, while toilets are typically separate.

1-2 About Apartments (condos) in Japan

In Japan, what Americans call "condominiums" and the British call "apartments" or "flats" are referred to as "mansions." This can be confusing for foreigners because the term "mansion" in English usually implies a large, luxurious house. Japanese developers started using the term to add a sense of luxury to these large shared buildings. In this article, we'll use the term "apartment" to refer to Japanese "mansions."

The main difference between a house and an apartment is ownership. In an apartment, you own your individual unit, but common areas like hallways, balconies, and entrances are shared. Residents must follow management rules for harmonious living. There are monthly fees for management and repair funds, which cover large-scale repairs. Many apartments have a manager who handles cleaning and maintenance of common areas. Apartments are usually built with reinforced concrete, providing excellent fire resistance, earthquake resilience, and soundproofing.

2. Six Key Perspectives on Choosing Between an Apartment and a House in Tokyo

Choosing Between an Apartment and a House in Tokyo

2-1 Property Value and Ease of Sale

When examining past real estate trends in Tokyo, it becomes evident that purchasing apartments resulted in higher asset value appreciation compared to detached houses. According to data published by the East Japan Real Estate Flow, the average price of used apartments has continued to rise since 2013, nearly doubling compared to prices in 2013. During the same period, the average price of used detached houses increased by 1.3 times, indicating that apartments showed a superior rate of asset value growth.

Tokyo Real Estate Transaction Price

Moreover, Tokyo's real estate market is known for higher liquidity in apartments compared to houses. Data from 2023 shows that there were 35,987 transactions for used apartments in the metropolitan area, compared to 12,871 transactions for used houses. This means apartments were nearly 2.8 times more frequently traded.

From this, it's evident that apartments are easier to sell and can be converted to cash more quickly. If you anticipate a higher likelihood of selling your property in the future, purchasing an apartment might be the better choice. However, for used apartments, issues with building management or maintenance can make selling difficult. Therefore, when considering buying a used apartment, it’s crucial to check the management and maintenance conditions.

2-2 Flexibility

If you're planning to live in the property long-term without considering resale, a house is recommended. You can remodel to change the layout, and if the building becomes outdated or is damaged by a disaster, you can rebuild or sell the land at your discretion. This is a significant advantage over owning an apartment unit. Additionally, even if the building itself loses value due to aging, the land's value remains unaffected, which often results in a higher final asset value compared to an apartment.

2-3 Family Composition

Whether or not you have children has a significant impact on choosing a home. Families with young children, for example, may prefer a spacious home where kids can play freely and access to nearby parks with greenery for a nurturing environment. In such cases, a detached house with a yard and customizable floor plans may be more suitable than an apartment.
On the other hand, for dual-income couples wanting to live comfortably in the city center, purchasing a conveniently located condominium for easy commuting would be ideal. You won't need to allocate time for managing or cleaning the entire building, and many apartments nowadays even have delivery boxes installed, reducing hassle for busy couples.

2-4 Location

Proximity to workplaces, schools, hospitals, grocery stores, and large commercial facilities accessible by walking or public transport is a key factor in livability. Apartments in Tokyo often boast convenient locations near train stations compared to detached houses, appealing to those prioritizing convenience. Detached houses, on the other hand, tend to be located in quieter areas slightly away from bustling neighborhoods. While not universally true, if convenience is a priority, apartments may be preferable due to their location.

2-5 Relationship with Neighbors

Whether choosing an apartment or a detached house, some level of neighborhood interaction is inevitable. Apartments, especially those with multiple households, are known to have closer proximity to neighbors, potentially leading to noise and other issues. In a detached house, while neighbor issues can still arise, the independent nature of the building allows for greater freedom and less concern about noise compared to apartments.

2-6 Security and Disaster Prevention

In terms of the number of potential entry points, apartments generally offer higher security compared to detached houses. Apartments with on-site managers, keycard access systems, and security cameras as shared facilities are particularly superior in terms of safety.
Looking at disaster prevention, reinforced concrete structures commonly found in apartments tend to have lower disaster risks compared to the wooden structures often seen in detached houses. In fact, detached houses are more susceptible to earthquake damage than apartments. Moreover, due to the dense building arrangement in residential areas for detached houses, there is a higher risk of fire spread during emergencies. Apartments, typically built with reinforced concrete, offer higher durability and fire resistance, making them more advantageous in terms of disaster prevention compared to detached houses.

3. Which Property Type is Cheaper: Detached House or Apartment?

Regardless of location, property prices are determined by factors like location, age of construction, layout, and market conditions, so it's not straightforward. As of 2022, the average price for new apartments in the Greater Tokyo area was ¥63.41 million, while new detached houses averaged ¥43.12 million. Prices for new apartments in central Tokyo are even higher. One significant reason why apartments are generally more expensive than detached houses is their prime locations near city centers and train stations, whereas detached houses are often located slightly away from bustling areas.
Naturally, if you were to build similar-sized buildings in the same location in Tokyo, the land cost alone would make detached houses significantly more expensive. Therefore, the choice between an apartment in a prime location or a larger detached house slightly away from the city center often comes down to personal preferences and values.

4. Which Type Incurs Higher Maintenance Costs?

Regardless of the type of property purchased, there are ongoing maintenance costs. For apartments, this includes monthly repair funds and management fees, which can also become necessary for older detached houses, making them comparable in this aspect. However, detached houses often come with parking spaces, which is advantageous. In central Tokyo apartments, parking fees alone can amount to tens of thousands of yen per month, and some properties may lack sufficient parking spaces.
Additionally, insurance premiums for fire and earthquake coverage are significant expenses. Apartments, with their higher fire resistance and earthquake resilience due to reinforced concrete construction, generally have lower insurance premiums compared to detached houses.
Below are the main maintenance costs summarized:

  1. Management Fee: Cost associated with managing an apartment.
  2. Repair Reserve Fund: Monthly fee paid by apartment residents for planned repairs.
  3. Maintenance Fee: Cost for repairs of exterior and interior of the property.
  4. Parking Fee: Rental fee for parking spaces.
  5. Property Tax: Tax imposed on real estate, including houses.
  6. City Planning Tax: Tax for properties located in urban areas.
  7. Insurance Premium: Insurance prepared for incidents like fire and earthquakes (e.g., fire insurance, earthquake insurance).

Maintenance Costs for Detached Houses and Apartments

Maintenance Cost Detached House Apartment
Management Fee
Repair Reserve Fund
Maintenance Fee
Parking Fee
Property Tax
City Planning Tax
Insurance Premium

7. Areas Suited for Detached Houses and Apartments

If you already have a specific area in mind, researching the trends of real estate in that area will make it easier to decide whether to purchase a detached house or an apartment. Once you've chosen your desired area, you can further investigate based on your budget and floor plan preferences. If apartments dominate the search results in your preferred area, there's a higher chance of finding a suitable apartment that meets your criteria.

Additionally, selecting the ideal property type based on the area's characteristics is another approach. For those who prefer living in the city center at a higher cost, apartments near central districts like Chiyoda, Chuo, Minato, Shibuya, and Shinjuku are recommended. Apartments in these areas have high asset value and have consistently appreciated over the past decade, maintaining their property value. On the other hand, if you value a serene environment and easy access to nature, considering detached houses in Setagaya, Nerima, Suginami, and Itabashi, which are accessible to the city center and have ample greenery, might be ideal.

Since Tokyo's areas vary significantly in characteristics, it might not be easy for foreigners unfamiliar with Japan to conduct detailed research. In such cases, starting by contacting multiple agents listed on Japan-Property, finding agents with extensive experience and a solid reputation, can be a good initial step. Purchase your ideal home in Japan and enjoy urban living to the fullest!

May 16, 2024