> ## Content Index > Fetch the complete content index at: https://www.uchiinsights.com/llms.txt > Use this file to discover other available public pages before exploring further. # Why Japan’s Property Investors Still Expect Prices To Rise As Rates Go Up - URL: https://www.uchiinsights.com/why-japans-property-investors-still-expect-prices-to-rise-as-rates-go-up/ - Published: 2026-08-13T03:31:07.000Z - Updated: 2026-08-13T03:31:06.000Z - Description: Japanese property investors increasingly expect higher financing costs, yet more are also predicting further price growth—a tension that says a lot about today’s market. - Author: Chris Pickering - Tags: japan Japan’s property market is entering an unfamiliar phase: investors increasingly expect money to become more expensive, but many still expect real estate prices to rise. A June survey by Nomura Real Estate Solutions found that 42.1% of property investors expect prices to be higher a year from now, up sharply from 33.2% in last year’s survey. Another 33.6% expect prices to remain broadly unchanged, while 24.3% expect them to fall. At the same time, an overwhelming 93.6% expect borrowing rates for real estate investment to rise, compared with 81.9% a year earlier. Around three in ten respondents also said lenders had become stricter during the previous six months. At first glance, those views appear contradictory. Higher financing costs normally reduce the amount investors can borrow, put pressure on yields and ultimately limit what buyers are prepared to pay. But Japan’s current property market contains powerful forces moving in the other direction. ### Higher Rates Do Not Automatically Mean Lower Prices Inflation, construction costs and labour shortages continue to make new buildings more expensive to deliver. In land-constrained urban markets, the supply response is also limited. If replacing an existing building becomes increasingly costly, the value of good existing assets does not necessarily fall simply because financing has become more expensive. This appears to be part of what investors are seeing, as Nomura’s survey found stronger expectations for price growth against a backdrop of concern about inflation and construction costs. Investors are not necessarily expecting another indiscriminate property boom; they appear to believe that underlying supply and replacement-cost pressures can continue supporting values even while monetary conditions tighten. That distinction is important because we must remember that Japan spent decades in an environment where extremely low interest rates could almost be taken for granted. The transition towards higher rates changes the investment calculation, but it does not instantly remove scarcity, construction inflation, tourism demand or the appeal of high-quality property in locations where supply is difficult to reproduce. ### Investors Are Becoming More Demanding The survey also shows that optimism about prices is not translating into blind enthusiasm. Some 30.7% of respondents said higher prices and construction costs had caused them to scrutinise yields and purchase conditions more carefully, while 24.3% said they had postponed new investments. More than half had adjusted their investment decisions in some way. That may be the most useful finding, showing a market can remain bullish while becoming much more selective. Investors can believe that Tokyo offices, well-located apartments or certain resort assets will continue appreciating while simultaneously refusing to buy weaker properties at aggressive yields. Rising financing costs increase the penalty for getting the asset or the price wrong. The survey also found that investors owning multiple buildings were particularly likely to report tighter lending conditions. That makes sense: experienced, leveraged investors feel changes in financing conditions directly across an existing portfolio rather than simply as a theoretical future cost. ### Still Looking To Buy Despite those concerns, investment appetite remains surprisingly strong. Around 70% of respondents said their medium- to long-term strategy involved either actively considering further purchases or considering replacing existing assets. That does not mean 70% will actually buy. The survey covered only 140 members of Nomura’s investment-property platform, so it should be treated as a sentiment indicator rather than a forecast for the entire Japanese real estate market. But even if it is just directional, it is interesting to note that investors do not appear to be responding to higher rates by abandoning property. Instead, they are adjusting their hurdle rates, becoming more disciplined about price and continuing to look for assets capable of absorbing higher financing costs. For Uchi Insights readers, that has obvious relevance to resort property as well. A unique site, finished high-quality chalet or professionally operated residence may retain pricing power because supply is genuinely constrained. A marginal development site whose valuation depends heavily on cheap finance and optimistic future assumptions becomes harder to justify. Higher rates therefore do not necessarily bring every property price down together. They can widen the gap between assets investors are prepared to compete for and those they are prepared to leave behind. Japan’s property investors appear to understand that distinction. They expect financing to get more expensive. Many still think property will too. The result may not be a weaker market so much as a more selective one.