Transaction volume softened in May
Japan's Ministry of Land, Infrastructure, Transport and Tourism released its May 2026 Existing Home Sales Volume Index on August 31. The seasonally adjusted combined index for detached houses and condominiums stood at 125.0, down 3.5% from April. Excluding condominium units smaller than 30 square meters, the combined index was 114.3, a 2.9% decline. Detached houses fell 3.4% to 124.6, while condominiums dropped 4.4% to 124.2. The April combined index had already declined 1.3% month on month, indicating that transaction momentum softened through the spring even though the level of activity remains well above the 2010 benchmark of 100.
Prices and market liquidity should be analyzed separately
High-priced transactions in central Tokyo often dominate discussion of Japanese residential real estate, but rising prices do not necessarily mean that transaction volume is expanding. In May, the condominium index excluding units below 30 square meters also fell 4.1%, suggesting that the decline was not limited to small investment studios. The figures are national, so conditions can differ substantially between central Tokyo, Osaka, regional cities and suburban markets. Buyers should therefore combine the national index with local data on completed transactions, inventory and asking-versus-closing prices before drawing conclusions about a particular property.
Liquidity matters for foreign buyers' exit strategies
For overseas investors, exchange rates and gross yields are only part of the investment calculation. When transaction volume weakens, asking prices may remain high while marketing periods lengthen or negotiating conditions change. Investors planning a future resale therefore need to understand how many comparable properties are actually trading in the target location. The next question is whether the national index rebounds from June onward or whether condominium transaction volumes continue to soften. With Japanese financing conditions also becoming less accommodative, the interaction between borrowers' purchasing power and sellers' price expectations will be an important indicator for the second half of 2026.