Renting vs. Buying in Tokyo: Which Is the Better Option in 2025?

As we enter 2025, the Tokyo real estate market continues to evolve, and potential tenants and buyers are increasingly weighing their options: should they rent or should they buy? Whether you're a newcomer to Tokyo or a long-time resident, this is an important question with far-reaching financial implications.

In this blog post, we'll explore the pros and cons of both renting and buying in Tokyo in 2025. By the end of this article, you'll have a clearer understanding of which option might be right for your lifestyle and financial situation.

The Current State of the Tokyo Real Estate Market in 2025

Tokyo remains one of the most dynamic and expensive real estate markets in the world. In 2025, property prices are seeing modest increases, fueled by both demand and low-interest rates that have made borrowing attractive. However, there is a growing trend of younger professionals and families preferring flexible living arrangements due to the unpredictability of future employment or life circumstances.

Additionally, the supply of new properties has been rising, particularly in areas outside the city center, such as in parts of Saitama, Kanagawa, and Chiba. While these locations offer more affordable options, they still provide excellent access to Tokyo’s job market and amenities.

Renting in Tokyo: Flexibility and Freedom

Renting remains the most common option for many residents in Tokyo, especially among younger people and expatriates. But why is this so, and what are the advantages?

1. Flexibility and Mobility One of the biggest advantages of renting in Tokyo is flexibility. Renters are not tied down by the long-term financial commitment that comes with buying a home. If your job moves you to a different area, or if your personal circumstances change, you can simply move out at the end of your lease. This is particularly appealing for those in their 20s and 30s, as well as people on temporary work contracts or those who plan to move abroad.

2. Lower Upfront Costs Renting a property in Tokyo involves relatively low upfront costs. You’ll typically need to pay a deposit, key money (a one-time gift to the landlord), and agency fees, which can still be significant, but are much less than the down payment and closing costs of buying a property.

3. Avoiding Market Volatility Real estate markets fluctuate, and with Tokyo’s rising property prices, renting can feel like a safer option. Renters are shielded from the risk of property value depreciation or market instability, which can be a major concern for homeowners, especially in an unpredictable global economy.

4. Access to Premium Areas Renting allows you to live in more desirable or central locations, where property prices might otherwise be out of reach. For example, living in areas like Shibuya, Shinjuku, or Roppongi could be unaffordable for many buyers but is often accessible to renters. This provides easy access to work, entertainment, and public transportation.

Buying in Tokyo: A Long-Term Investment

While renting offers flexibility, buying a property in Tokyo has its own set of compelling advantages, especially for those looking to make a long-term investment in the city.

1. Building Equity One of the most significant benefits of buying a home is the opportunity to build equity over time. Instead of paying rent to a landlord, you are paying off a mortgage, which gradually increases your ownership stake in the property. This can provide financial security and long-term wealth accumulation, especially if property values continue to rise.

2. Stability and Security Owning a home provides stability. You won’t have to worry about rental price increases or the possibility of your landlord deciding to sell the property. With a fixed-rate mortgage, your monthly payments will remain predictable for years, providing peace of mind in an otherwise volatile market.

3. Customization and Personalization When you own your home, you have the freedom to make modifications and renovations to suit your personal style and needs. From remodeling the kitchen to adding an extra room, the possibilities are endless when you're not constrained by the limitations of a lease.

4. Potential for Profit While property prices in central Tokyo have seen a steady rise over the past few decades, they are also expected to continue increasing in value, particularly in prime areas. If you purchase a property in Tokyo, there is a strong potential for the value of that property to appreciate over time. In the long run, this could be a lucrative investment, especially if you decide to sell or rent the property out in the future.

Factors to Consider in 2025: Renters vs. Buyers

Ultimately, the decision to rent or buy depends on your individual circumstances. Here are a few factors you should consider before making your decision:

1. Financial Situation Buying a property in Tokyo requires a substantial upfront investment, which can be a barrier for many. A typical down payment can range from 10-20% of the property price. If you have the financial stability to make this commitment, buying may be a good choice. On the other hand, renting may be the more viable option if you don’t have the capital for a down payment or prefer lower upfront costs.

2. Length of Stay If you plan to stay in Tokyo for a long time, buying could be more financially beneficial over the long run, especially if you anticipate property values continuing to rise. However, if you're in Tokyo for a short-term assignment or uncertain about where you'll be in a few years, renting offers the flexibility to move with minimal hassle.

3. Lifestyle Preferences Consider your lifestyle. If you value flexibility and prefer not being tied down by a mortgage, renting offers the freedom to move around easily. But if you're ready to settle down, want to create a stable home, and are willing to commit to a long-term financial plan, buying might be the right choice.

4. Location Preferences As mentioned earlier, buying in central Tokyo can be prohibitively expensive. However, renting allows you to enjoy these high-demand locations without the hefty price tag. If you want to live in an area like Shibuya or Minato but can’t afford to buy, renting remains the most viable option.

Final Thoughts: Renting vs. Buying in Tokyo in 2025

In 2025, the decision to rent or buy in Tokyo is shaped by both personal financial circumstances and lifestyle preferences. Renting offers flexibility and lower upfront costs, making it an appealing choice for those who may not be ready to commit to the high costs of purchasing property. On the other hand, buying a property in Tokyo can be a great investment for those with the financial means to do so, providing long-term stability, the potential for appreciation, and the ability to build equity.

At First Step Co., Ltd., we understand that this decision can be difficult, and we are here to help guide you through the process—whether you’re looking to rent or buy in Tokyo, Yokohama, Kanagawa, Saitama, or Chiba. Our team of experienced real estate agents can offer personalized advice and help you find the perfect property to suit your needs.

If you’re considering renting or buying in Tokyo in 2025, feel free to contact us to discuss your options! - Mashrif