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  • Fun facts #18: More than 10% of all homes in Japan are vacant, will be nearly a quarter by 2028

    Posted by Dr. ARUDOU, Debito on February 9th, 2014

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    Hi Blog.  With some media outlets forecasting a rise in rents due to an alleged economic recovery Abenomics (somehow seeing rising fixed costs for businesses and people as a harbinger of something good), here’s an article stating that Japan’s depopulation (except in Tokyo, where any real opportunity for economic upward mobility is clustering) is probably going to render that moot.  Japan’s housing (as you longer-termers probably know, it’s already pretty crappy and not built to last) is also depopulating, as this fascinating article from the Japan Times excerpted below demonstrates.  Already more than 10% of all homes in Japan are vacant, and in less than a generation it will be nearly a quarter.  And yet there are forecasts for rents (okay, office rents) to rise again.  I smell another real estate bubble in the works, although media-driven instead of demand-pulled.  Should be some bargains out there for those who can find the realtors and renters who aren’t “Japanese Only.”

    I put this under “Fun Facts” because these stats are surprisingly insightful statements on the way things are, or will be, in Japanese society. Those of you more in the know about Japan’s property market (I’ll ask Terrie Lloyd and see if he’ll comment), please feel free to prognosticate.  ARUDOU, Debito

    ///////////////////////////////////////////

    NATIONAL
    Land tax loophole ensures unused, dilapidated firetraps stay standing, till they fall
    Abandoned homes a growing menace
    BY TOMOKO OTAKE
    THE JAPAN TIMES, JAN 7, 2014

    As Japan’s population ages and shrinks, run-down, uninhabited properties like this are becoming more common. As of 2008, the most recent year for which statistics are available, there were 7.57 million vacant homes, or 13.1 percent of all houses in Japan, up from 3.94 million in 1988 and 5.76 million in 1998, according to the Internal Affairs and Communications Ministry. The rate is expected to rise to 23.7 percent in 2028.

    While these figures include second homes and properties waiting to be rented out or sold, more than a third of the 7.57 million vacant homes in 2008 were categorized as properties left unattended by owners or whose owners have died and are not taken care of at all. Many of these properties are now causing problems in their communities, experts say. As the structures age, the risk of collapse and fire increases. Some have leaked wastewater, damaging neighboring properties. They are also a magnet for criminal behavior, such as arson. 

    Rest of the article at http://www.japantimes.co.jp/news/2014/01/07/national/abandoned-homes-a-growing-menace/

    20 Responses to “Fun facts #18: More than 10% of all homes in Japan are vacant, will be nearly a quarter by 2028”

    1. Johnny T Says:

      Hardly surprising when you see the extent of depopulation in Japan’s regions (only set to accelerate).

      For example Yamagata Prefecture, when I first came to Japan in 2000 had a population of 1,244,147, according to wikipedia now has a population of 1,139,172. That has to mean a lot of empty houses somewhere.

    2. DR Says:

      Well, I don’t think they can count on immigration from Asia with antics like these: http://youtu.be/Ct1EBD1ywuw Is this guy for real? Makes my good ol’ buddy Blinky look like UN rep. Sadaka Ogata!

    3. john k Says:

      So..

      “..In October 2010, Tokorozawa introduced the nation’s first ordinance specifically targeting vacant homes, in response to mounting calls from residents worried or angry about the problems they cause. The ordinance spells out the owners’ responsibility to properly manage their properties and allows the city to order them to improve the situation — and publicize their names if they don’t….”

      rather than address the issue of crappy cheap nasty, yet hyperbolate the selling price despite crap quality, life-spans of just 20years, poor insulation, etc etc, they blame the owner.

      The Govt./house makers continue to ‘print money for old rope’ with utter rubbish houses, then blame the owner for not looking after it. Somewhat diffuclt to look after a hosue that has no quality built in from the start.

      But:

      “..“There are many houses, not just vacant ones, but ones in which people still live, that have long been left to deteriorate to a degree that they pose a danger to other people,” he said,…”

      it appears they recognise the problem, but as always fail to discuss the elephant in the room.

      And if that is not enough

      “…And even more fundamentally, people shouldn’t let unused properties remain idle, says Ueda of the Tokorozawa NPO….”

      More control??…..ok Mr Tanaka, we (the bank) shall lend you the money for the cheap nasty crappy built house, that wont last more than 20years. And every winter you moan that it is too cold and every summer moan that it is too hot and wonder why after a few years things fall apart but you’re happy because you’ve paid stupid amounts of money for a “contract” that says “we(the house maker)” will fix it for you, for up to 20years, when in fact a simple screw driver will do…..but if you get fed up with the crap quality and do not invest into your property like the rest of the world (even Afghanistan house prices are rising) to improve it and update it (as a financial investment), you cannot leave the house unused. You must have some poor sucker living in the house when it is even further unfit for human habitation than when you first bough it.

      Great solution!!!

      The whole control issue from Govt laws (which are shocking) to the control and cartel of the house makers coupled with the extremely cheap crappy quality and the crazy tax system all related to the feudal days of land tax (because the Govt has no other intelligent means of generating money) is not to blame then!

      BTW…if anyone is interested. When i bought my house, i wanted it made from brick..not allowed. Law says nothing over 1.50m high, earthquakes was the lame excuse. But it becomes clear why, it means quality it means the house will last (if designed and built properly; bricks/stones are used in many other earthquake zones with great success). If the house lasts the cartels no longer have the control..the control is with the owner as is the housing market price for second hand houses like the rest of the world, inc Afghanistan. I could go on…but it’ll take up unnecessary band width.

      The report is not surprising at all….but as always fails to address the problems root cause. The fact that house makers are building brand new homes everywhere I look, and remain empty and wonder why (not just poor quality – although J’s don’t recognise this- but who is to buy them when the population is declining) is QED.

    4. john k Says:

      Slight tangent, but indirectly related:

      “..Parents of mixed kids look abroad for high schools..”*

      Interesting, but not unexpected comment:

      “..“Our son has always been unafraid to speak his mind, so not a ‘typical’ Japanese,” Kazu says. “We didn’t want him changing his personality in order to fit in, so we looked for other options.”..”

      *http://www.japantimes.co.jp/community/2014/02/02/general/parents-of-mixed-kids-look-abroad-for-high-schools/#.Uvl55s7HTLh

    5. John (Yokohama) Says:

      They need to change the tax situation on the property. Calculate the property tax based on the market value of the property (building and land) or just land.

      I always think back to the depopulation issue when people say we don’t have the space for foreigners…

    6. Andrew in Saitama Says:

      If the Japanese built cars like they build houses:

      * You would have little choice between a lovingly restored T-model Ford, the latest Prius hybrid, or a rusted out 1978 Sunny.

      * Changing a tyre would require a team of engineers.

      * The heater/air conditioner would heat/cool only one seat at a time.

      * Aerodynamics and space would be sacrificed at the expense of attempting very badly at looking like a classic car.

      * The glove box would be an expensive optional extra.

    7. arudou debito Says:

      Terrie Lloyd writes back:

      I did indeed write about this phenomenon. In the industry they’re
      simply called Akiya. Seems like the numbers vary somewhat though…

      http://www.japaninc.com/tt565_vacant-houses-in-Japan

      General Edition Sunday, May 16, 2010 Issue No. 565
      +++ WHAT’S NEW

      Now that Japan’s population is officially dropping and will
      probably continue to do so for the foreseeable future, it
      is easy to predict that from here on we will start to
      experience a surplus of vacant housing. Actually, this
      trend is already happening in the countryside areas all
      over the nation, not just from people dying faster than
      they are born, but also because of the ongoing trend of
      urban migration.

      Indeed, last year, Tokyo was one of the few cities to
      continue recording an increase in population, adding 83,000
      people. And if you include the surrounding bed towns, then
      the migration trend is even more obvious. So just how many
      vacant properties are there in Japan? According to the
      Internal Affairs and Communications Ministry in 2008, there
      were an amazing 4.127m unoccupied housing units, up 451,900
      from 2003.

      That’s a lot of unused homes.

      Unoccupied homes, otherwise known as “akiya” in Japan
      apparently account for about one in eight dwellings. We
      could not find any definitive figures, but from our
      experience, they fit broadly into three major categories:

      1) The ancestral home, where all the kids have moved to
      nearby cities and mom and pops are either in old age homes
      or have already died of old age. These houses are
      recognizable because they’re older style homes that are
      being overrun by vines and vermin, and yet no one seems to
      be making much effort to stop the rot. Most such homes
      should be demolished, but since this costs more than the
      place might be worth, the family legally leaves things as
      they are. Many of these homes are beyond repair and
      although officially registered are uninhabitable.

      2) Next are the apartments and postage stamp size houses
      in bed towns and the countryside where people have simply
      upped and moved to the city and were unable to sell the
      house. Often these places have tax liens against them, and
      you can often see them coming up for sale in tax
      foreclosures. Check out the site http://bit.sikkou.jp/. We
      have a friend in Okayama who bought one of these houses and
      she was telling us about a property consisting of a
      recently built log house on 60 tsubo of land, that was
      being sold by the local court for just JPY3MM. That would
      have been about 50% of the replacement value of the house
      alone. Of course, you’d have to want to live in the deep
      countryside to wind up with such a bargain. The closer you
      get to the major cities, the higher the bids by people
      wanting to buy foreclosed property. You can track the bids
      on the website. Quite interesting stuff. All in Japanese of
      course.

      3) Second homes owned by wealthy city dwellers who fell in
      love with a town or countryside location, bought some
      property and built a house, then forgot about it. The best
      way to find these places is to drive around your favorite
      location and go in and pester the local real estate agents.
      Favorite places to find such homes include the Izu
      Peninsular, Karuizawa, and in and around Mount Fuji. Now
      that several foreign banks are willing to lend against
      second homes, this is quite viable as an option. We’re told
      the key to a bargain is to be persistent with the owner and
      wait until they need the money badly enough. With the
      economy sputtering along the way it is, you may not have to
      wait that long.

      You can find akiya all over the country, and particularly
      out in the countryside. Trawling the internet has turned up
      some quite interesting websites and blogs of foreigners who
      have bought into local communities rather cheaply, by
      acquiring a disused Japanese style house (“Minka”) and
      fixing it up. Not all the experiences being posted are
      positive, but they certainly point to the fact that in the
      face of declining populations, many countryside towns would
      welcome anyone, even foreigners, into the midst so long as
      it means the rejuvenation of their community.

      One reason why foreigners are a good fit to solve the
      vacant housing problem is that they are more willing to
      live in older properties and to perform their own
      maintenance. Japanese have been educated over the last 50
      years that housing older than 25 years old should be
      demolished and rebuilt, leading people to really only want
      to buy new places. This writer knows this firsthand, after
      a relative bought a countryside property, built a
      substantial Japanese-style post-and-beam house on the land
      (and which will last another 50 to 100 years), but being
      told by the bank several years ago that the house itself is
      now considered to already have zero value….!

      So with this in mind, we have been wondering if there isn’t
      a business in gathering information about akiya, and
      setting up some kind of buy-sell-rent exchange center,
      where a property manager would handle the details but
      owners could find tenants looking for a bargain. There is
      in fact such a company doing this, and we met with them
      last year, but they told us that the demand by Japanese
      themselves for akiya is very low. As a result, although
      they are the largest handler of akiya in the nation, they
      only have 4,500 dwellings on their books.

      Akiya might be in low demand with Japanese right now, but
      if the polarization in the economy continues for much
      longer, there will be an increasing number of people who
      can’t be choosy. And then, of course there are the
      foreigners. Our imagination quickly conjures up a program
      of akiya communities in, say, Kyushu or Sado Island,
      serving Chinese and students of other nationalities,
      needing somewhere cheap to live while they study Japanese.
      We don’t know if the locals would be too happy about it,
      but we figure they will get over it as the rent money starts to
      flow. :-)

      Or are property owners just too stubborn to want foreigners
      in their midst?

      The Japan Times ran an interesting article last week about
      an organization called the Japan Property Management
      Association, which called a seminar of 170 real estate
      agents to discuss how to get more foreigners into the
      vacant housing stock of the nation. Indeed, with
      foreigners in Japan being the only increasing population
      group, it is inevitable that they will be the renters of the
      future.

      The seminar basically dug up the same old stuff about the
      majority (60% according to one survey) of all estate agents
      being uncomfortable dealing with foreigners and not being
      able to communicate. It appears that the Association is
      making vigorous efforts to help overcome the language
      barrier and has published guides in four foreign languages
      for non-Japanese tenants, spelling out the rules of
      tenancy. It is going to take a long while for old
      prejudices to be broken down and certainly the problem
      isn’t just non-Japanese speaking foreigners not knowing
      which trash to throw out on which specific day.

      In the end, we wonder if the language of cold hard cash
      might not overcome that discomfit? This has certainly been
      the experience of another moribund area that was
      rejuvenated by foreigners moving in — we speak of
      Nisseko. Sooner or later, the financial needs outweigh the
      emotive ones: Maslow’s hierarchy of needs at work…
      ENDS

    8. DeBourca Says:

      Lloyd is being a bit disingenuous about the whole housing thing. He should know that Japanese houses are dreadfully constructed. Carrying out maintenance on a flimsy badly insulated rabbit hutch in the sticks will only get you so far, especially with the increasingly brutal winters. Plus you have punishingly high taxes payable to local authorities. These are very high out in the country: hundreds of dollars a moth and more, and they will rise as cash strapped authorities try to get money from dwindling numbers of rural dwellers. Transportation routes are dreadful, too, and will get worse as construction money stays in Tokyo. Basically, I think that foreigners are getting fooled into buying “bargain” houses that Japanese wouldn’t go near. Foreigners need to be aware that in the long run, these houses are a very bad and potentially dangerous investment. If you want to buy property, look elsewhere in Asia.IMO

    9. Brooks Says:

      I did see something in Nagano on certain websites where the akiya are an alternative to summer houses, and people could use them as hotels or just rent them out by the week.
      Much cheaper than staying in normal hotels.
      I could not do this, as I have two dogs and pets were not welcome.

    10. Baudrillard Says:

      “The whole control issue from Govt laws (which are shocking) to the control and cartel of the house makers coupled with the extremely cheap crappy quality and the crazy tax system all related to the feudal days of land tax”

      Control indeed. Feudal indeed. Corporatism indeed- Government passes laws favoring big business but punishes or disallows small entrepreneurs.

      Mussolini would have been a fan, as he was one of the first to install corporatism in modern times.

      Alas, postwar rebranding of Japan fog people from seeing what this really is. It is not a free market. It is once again the obligations of the citizen to serve the state.

      Lets just call it for what it is, which is a word beginning with F and ending in “ascism”.

    11. 名無し Says:

      Almost 3 years ago I moved to Japan to an apartment in the countryside. It seems to be holding up alright, but when I first arrived here, there were a couple of rice paddies behind the building. In the past half year they were demolished and paved to make way for two brand new houses(I had the joy of listening to them being constructed every morning). This is just ridiculous to me because the area around my apartment is littered with abandoned buildings that are not being put to use. What’s more, there’s a dirt lot not far from here and closer to the local grocer that would have been a perfect spot to build new houses rather than demolish rice paddies that were being put to use.

    12. Baudrillard Says:

      “Lloyd …. should know that Japanese houses are dreadfully constructed. Carrying out maintenance on a flimsy badly insulated rabbit hutch in the sticks will only get you so far, especially with the increasingly brutal winters.”

      I get the impression that poor housing comes under the branding “traditional Japanese culture” and any “good” gaijin trying to “make a go” of it here will buckle under to some extent and try to “focus on the positive”.

      Upon leaving Japan for a couple of weeks, one tends to view things from a “western” perspective, i.e. the housing is what it is, the emperor’s new clothes.

    13. Loverilakkuma Says:

      Sounds like realtors have made a gross miscalculation on demographic shifts in the last ten years. There are lot of housing construction going on in the Kanto Plain (i.e., Tokyo, Kanagawa, Chiba), since people keep coming in for various reasons such as education, jobs, family issues. The thing is not all of those are committed to stay in a long-term; many end up leaving within 3-5 years. Some of those end up drifting from one place to another in a year or two.
      So, the city extends its area outside the downtown to build many apartments by tearing down local park or buy out an empty land spot for suburban sprawling.

      It’s bad city planning, and waste of property tax that goes up in smoke.

    14. Jim Di Griz Says:

      @ Loverillakkuma #14

      I think that the Japanese realty sector suffers from the same problem as most other Japanese businesses; they found a ‘winning formula’ way back in the 1060’s (or whenever), no latitude for innovation, self-appraisal and improvement, and have set the formula in stone, refusing to accept that outside factors have changed. As per usual, the Japanese consumer doesn’t understand that they wield the power in the dynamic of supply and demand.

    15. DeBourca Says:

      @post 13:
      Upon leaving Japan for a couple of weeks, one tends to view things from a “western” perspective, i.e. the housing is what it is, the emperor’s new clothes.

      That’s spot on. It was only upon leaving Japan that I realised the amount of self delusion so many NJ partake in. I included myself in this for a long time. I suppose it’s a coping mechanism. Seriously, by almost any objective standard, life for NJ in Japan has been getting worse for years now at pretty much every level. Yet there are quite a few NJ whose reaction to their increasingly diminishing wages/precarious employment prospects and rights is to consider buying decrepit shacks in some of the most hostile and radioactive land in the “developed” world! And they think this is a great thing! People are going to have to start copping on soon, IMO

      (NB: By “hostile” I mean environmentally hostile terrain. Mountainous areas with extreme weather conditions and suchlike.)

    16. Colin Says:

      I`ve been recently looking at buying a used home (can`t afford a new one) but the ones that I`ve seen have been in such horrible condition. I can`t believe someone would let their dwelling just rot away. I thought it was just shameful to let your home fall to pieces. After checking numerous homes, and all being in the same condition, I don`t know what I should do. And after reading some of the comments I`m not sure if it`s worth it. Might have to find a way to buy property back home but 150000 won`t get you much in North America. Any ideas???

    17. Andrew in Saitama Says:

      @ Colin # 16,

      Two main factors dictate the reasle price of a house: the age of the house (which drops to zero after about 20 years) and its distance from a station.

      As an example, when we were looking at buying a house, we were shown several properties of approximately equal price. One was a decrepid old building just above slum level but within 20 minutes walk of two stations. Another was about 20 minutes walk away from the nearest bus stop, and nearly an hours walk to the station, but was only a few years old and in immaculate condition.

      Housing quality has improved somewhat in very recent years (think: use of space, insulation, soundproofing), and even the housing cartels are asking themselves why Japanese houses have the shortest lifespan in the developed world.
      Not much help for those of us still paying off older houses, though!

    18. DeBourca Says:

      @Colin:

      Just so you don’t think I’m trolling, I’m basing my comments on personal experience. Me and my wife shopped around our area in Japan for a few years looking for houses. Many were cheap, but the other issues mentioned meant that we couldn’t justify buying property here.we no longer live in japan. However, I hope you get something decent. I’m sure there are exceptions, but as a general rule, I think buying property in Japan is a bad long term decision, aside from having a place to call your own. Philip Brasor who writes about property in the Japan times has a recent article basically arguing the same point. (Sorry, I can’t find a link at the moment).

    19. DeBourca Says:

      I noticed increasingly Japanese and NJ are buying property in other parts of asia, so that might be worth looking into. Malaysia and Thailand spring to mind.

    20. dosanko Says:

      Hi Colin,

      I continue to rent due to certain tax advantages, so you can take what I say with a grain of salt, but the real estate market in Japan (as with all real estate markets) is extremely location sensitive. It is really wrong to say that the real estate market in Japan, writ large, is bad. We continue to see cities attract residents while the countryside loses residents, with most major metropolitan areas in Japan seeing positive growth (think Tokyo, Sapporo, Sendai, Nagoya, Osaka, Hiroshima, Fukuoka). Given these demographic trends, I think you can expect the value of your real estate in these areas to be relatively stable for the foreseeable future. The problem, as you point out, is that the cost of admission in these markets is particularly high. For its part, the countryside also has limited potential, but it is mostly in resort’ish areas such as Karuizawa and Niseko where foreign investment is helping to drive the economics and pushing values up.

      If you just want to own something (I understand the urge), then purchasing overseas as you suggest may also make sense. I’ve even seen more than a few foreign nationals acquire overseas houses just to take advantage of Japan’s accelerated depreciation schedule (wooden, of course).

      In other words, I wouldn’t give up hope. Japan is relatively stable with (incredibly) strong ownership rights (as opposed to many other Asian nations) and it continues to attract foreign capital into its real estate sector. If I were you, I’d see what kind of rates I could get from my local bank (a big factor) and see if that could get me a place in or close to one of the big cities. I wouldn’t expect to hit an investment home run, mind you, but if you want a place to call your own, I think it would be a relatively safe choice.

      On the slightly different topic of build quality, I think most of the complaints voiced here are fair, although I think we are seeing a particular improvement in new construction. As for yours truly, I live in a 1980s building that was fully renovated (and renovated well), with two unfortunate left-overs: single-pane windows that are only slightly effective and an ancient central HVAC, both of which play a large role in some obscene utility bills. Otherwise, though, I’m happy.

      (Also, I think the Japan Times article that DeBourca kindly referenced is here: http://www.japantimes.co.jp/community/2014/02/03/how-tos/the-housing-conundrum-to-own-or-not-to-own/.)

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