Prices for new condominiums in Tokyo fell in 2024, moderating to a more sustainable growth trend after a big jump a year earlier.

The average price of a new apartment for sale in the Japanese capital and surrounding areas slipped 3.5% to ¥78 million ($498,000), according to the Real Estate Economic Institute. It was the first decrease in six years, and came after prices rose nearly 30% to a record high in 2023 when several luxury condos went up for sale.

The dip is unlikely to affect the overall trajectory of rising prices for new homes in Tokyo, which is being driven by factors including low supply and higher raw material and labor costs, analysts said.

"We should not see the temporary decrease as a peak,” said Tetsuya Kaneko, head of research at real estate company Savills Japan. "The general upward trend is here to stay, especially considering the overall inflationary trend and labor shortage.”

The number of new units for sale in the Tokyo metropolitan area fell 14.4% last year to a record low, according to the report released Thursday. Average prices for new condos in central Tokyo dropped 2.6% to ¥112 million.

The Bank of Japan is widely expected to raise interest rates on Friday, but its impact on the real estate market is likely to be mild as a crowded banking industry keeps a lid on mortgage costs.

"An interest-rate increase would be seen as negative, but its magnitude is offset by the competition among banks,” said Mari Kumagai, head of Japan research at real estate brokerage Cushman & Wakefield.