The article doesn't go into detail - are people in Japan likely to own both the house and the land? Or just the house and instead have some lease / permit for the land?
Typically people own both, although there are cases of people building on leased land.
The land value is assessed separately from any structures built on it for the purposes of taxation, which I think is what they mean when they say it is “calculated separately”.
These are assessed separetly for taxation purposes/assessment value.
Some areas are leased land for say 75 year contracts or any other long term (alot of indigenous/native owned land that is leased for a term contract. There's some condo development and mall with a 100yr lease etc)
I haven't seen many leasehold properties, but I did come across one area where a bunch of vacation homes are built on property that is leased by the government.
Here's one I found that actually looks looks pretty nice for ¥3M (USD $21K). But the lease payments and administration fees probably scare away any prospective buyers (it's also in a forrest in one of the snowiest areas of Japan, so accessibility in winter might be a bit of an issue).
Note that this one mentions 借地料, meaning that you are not an owner of the land, but the government is lending it to you for a yearly fee of 220,000 yens.
Almost all houses in Japan are bought along with the land. Occasionally there are leasehold properties. I have seen 50 year residential leaseholds owned by a temple, but they are rare.
And that makes it less wasteful?
At any rate there are lots of unusual things about Japan, including the post-WW2 rapid transformation it went, that make it hard to judge whether typical rebuilding rates are "wasteful" compared to other developed countries. But it is true there's a lack of much tendency to value "historical" buildings we tend to outside Japan (and arguably most Asian countries).
No, I think it is quite opposite. Ofc, depends on location, but reading some experiences summers are hot and winters are cold. And traditionally insulation has been after thought... From times when there was no proper heating or cooling.
Maybe this is one reason why modern buildings are build, to get better cooling and heating and insulation.
The article does bury the lede a bit by neglecting to point out that the land retains its value, only the house itself loses value. It is an interesting article to an extent in that it points out some fundamental differences between the way the west in general and USA specifically vs Japan think about houses. But it doesn’t really explore the idea beyond that
The second paragraph makes a distinction between house and land values:
> According to Nomura, a brokerage, the value of the average Japanese house depreciates to zero in 22 years. (It is calculated separately from the land, which is more likely to hold its value.)
I can not be bothered to do the experiment, but take a US house. Do zero maintenence or updating for 22 years and I expect it will have depreciated towards land value only.
> According to Nomura, a brokerage, the value of the average Japanese house depreciates to zero in 22 years. (It is calculated separately from the land, which is more likely to hold its value.) Most are knocked down and rebuilt.
This is talking about the assessed value of the house. It also implies that when a house reaches 22 years it is instantly knocked down and rebuilt, which is not true.
> The frequency of earthquakes also plays a part. Large tremors tend to be followed by tougher building regulations.
Even without the regulations, the level of destruction is hard to understand. Walking through a suburb of Kumamoto after the big earthquake in 2016 it seemed like every third house had partially collapsed. Landslides and flooding are also common.
Housing in Japan seems a world apart from housing in the UK. In Japan, I have lived in the same rented apartment with no rent increases for a decade. This is unimaginable in the UK. Strong tenants rights mean that once you are in a place you can more or less expected to be in there until you want to leave. The letter of the law on rent increases is that they must be justified by the surrounding market, but the cultural trend is to wait until a tenant has moved out.
Articles about cheap or free houses in the countryside of Japan pop up every now and again but the reality is most of these houses are worthless. Unoccupied, it only takes a few years for a leak to spring in the roof and the wooden house will rot away to nothing very quickly after that. They are located far from any kind of desirable jobs and services. Sometimes the owners, usually children who have moved to Tokyo for work, don't want to sell. I remember looking at one place, in a state of partial collapse, with the dates the family had come to visit written onto the wall by the front door. Yearly visits for over a decade but few repairs meant that the house probably wouldn't be around for much longer.
> In Japan, I have lived in the same rented apartment with no rent increases for a decade. This is unimaginable in the UK.
This is also because Japan has been at zero or negative inflation for the past decade, while the UK has not. Also, essentially the entire country outside of Tokyo is shrinking in population, which obviously depresses property prices.
> Also, essentially the entire country outside of Tokyo is shrinking in population, which obviously depresses property prices.
I wish this was a significant effect, but my country peaked in population in the late 90s and had Japan-level fertility (and suicide BTW) rates since, but we got hit with the same insane housing price increases as everyone else.
Around 2017, when there was little to no inflation, prices started going up.
This can't be explained by things like the influx of Ukrainians, since that originally started en masse after the annexation of Crimea in 2014. Also there's no such effect in 2022.
What is known though is that starting in 2014 investment properties started becoming an increasingly large proportion of the market - going from single-digit percentages in 2012 to 42%+ right before the pandemic.
What country? Perhaps the combined effect of deflationary pressure, Japanese-specific zoning laws, and shrinking population has created this lack of housing crisis.
>It also implies that when a house reaches 22 years it is instantly knocked down and rebuilt, which is not true.
Yes, this is an annoyingly common misconception about Japanese housing. Just walking around a few random residential neighborhoods in Tokyo should disabuse anyone of the notion that homes here are all knocked down after a mere 22 years.
Buying secondhand homes here (whether stand-alone homes or condos) is very, very common. Misinformed articles like this are too common in western press.
Somehow I trust article more because they base it on statements from housing broker who seems to have much more data than single person living in Tokyo.
Maybe housing broker has skin in the game to push people to sell their houses for 0 to the broker as a scam.
> It also implies that when a house reaches 22 years it is instantly knocked down and rebuilt
I don't think it implies that. It just implies that the real-estate market values the land about the same as the land and house combined.
Of course the current inhabitant might well value the house more than the market - selling a house and moving (or demolishing a house and rebuilding) is inconvenient and includes a lot of hefty fees and taxes after all - which is why people continue to live in their homes for years or decades after the value of the dwelling drops to nothing and even turns negative.
> Even without the regulations, the level of destruction is hard to understand.
It's not only in Japan. I've seen this in other Asian countries as well. Perfectly good and relatively new building is destroyed to build another building that is not very different in size/structure.
I guess, it's something different in attitude towards environment. E.g. I wouldn't like my city to be rebuilt constantly. I like old buildings, history related to them. In Asia they probably feel different.
I have renovated properties before. It can be far cheaper (like half the cost) to bulldoze a property and rebuild it from scratch, especially if you are trying to update to sensible modern standards from 60's/70's/80's "standards".
The wastefulness is bad. However, housing should not be seen as a ever appreciating financial investment. That is what lead to housing shortages in cities like SF and all of the UK. It incentives people to block any additional housing (and sometimes any changes at all) to prop up their own housing price.
Anything after 81 has to comply with the "Building Standard Act: Earthquake Resistance Standards" that was passed. Which, interestingly enough passed due to the 41 Fukui earthquake.
Although telling this to my Japanese wife - whilst living in Japan and apartment shopping - doesn't stop her from thinking newer is better(despite obvious examples of this not being true).
For the most part, it IS true. Anything built before ~1982 is too dangerous because of the standards upgrade you mentioned (1981 isn't safe enough: houses take some time to construct, so some from that year don't meet those standards because they were started earlier), but there was another standards upgrade around ~2001 (because of the '95 earthquake in Kobe), so homes built after that time are yet another step higher in safety.
Another factor is renovations: many buildings go through scheduled renovations after 20 years, which can be disruptive (you have to move out temporarily). A newer building is farther from that point.
These earthquake standards are updated frequently. Kumamoto earthquake mentioned in the other comment is a typical example. Nowadays many believe Level-3 is a must(耐震強度3. I don't know about the U.S. equivalent. Do they even have one?).
I don't know about your wife's case. Some people believe earthquakes are like the lottery (and there are a few people who believe it's a god's will. Like Shintaro Ishihara after the 3.11 earthquake).
Of course earthquakes play a part, but I'd like to point out another case point: Taiwan.
Taiwan also suffers from earthquakes (it's on Pacific ring of fire, just like Japan). But it doesn't change how people think of the long term values of houses. 40+ years old houses are traded on market just fine.
Same with California, some of the most expensive real estate in the country and world is located on the coast and they are not shy about building houses there.
I feel like this is changing even in the 5 years since this article was written. Sellers are realizing that they can find a buyer faster and get more value by renovating a house prior to listing for sale.
Here's a 30+ year old used single family home chosen basically at random, it was renovated in June 2023:
Or if the seller doesn't have the money or motivation to renovate themselves, there are companies like this which will basically buy a house as-is and pay cash, and then renovate it and flip it:
Used homes listings like this can be found increasingly all over Japan, and I expect it to become increasingly common as older homes from the 80s and earlier (which do tend to be pretty crap in my experience and are not worth renovating) are torn down, and more homes from the 90s onwards (which tend to be pretty well-built and are worth renovating) enter the used home market.
For sure though I still see a lot of homes being torn down and new homes being built in their place (actually happening right outside my window as I write this). Or agricultural land being rezoned for new housing construction... often times right next to a vacant and decrepit old house.
I've been following one Swedish guy who moved to Japan and purchased old house in Tokyo and is made a series on renovating it as well as abandoned houses in Japan in general.
Cardboard, plywood, mud walls!?!?!, no concrete pour foundation. Its build using same techniques one would use to construct barn or a pig house 50 years ago in soviet bloc, maybe a camping vacation hut on a bad day.
I managed an old japanese house as an airbnb back in 2015. The house was at least 50-60 years old and was doing pretty well except for some exterior problems. I will say that the traditional style houses are built with way fewer materials and way less insulation than western style houses which means the material waste is not nearly as high on demo. Also, they were remarkably bug free due to the wood used, being elevated, and not having tons of wall cavities to harbor pests. Overall, this style of house fits their very humid climate without needing AC to be livable whereas here in the US southeast, a house without AC and with contact with the ground, will become a bug infested mess in no time. And then the demo will create probably 10x the waste.
55 comments
[ 5.2 ms ] story [ 123 ms ] threadThe land value is assessed separately from any structures built on it for the purposes of taxation, which I think is what they mean when they say it is “calculated separately”.
Most people for houses own the land and building.
These are assessed separetly for taxation purposes/assessment value.
Some areas are leased land for say 75 year contracts or any other long term (alot of indigenous/native owned land that is leased for a term contract. There's some condo development and mall with a 100yr lease etc)
Here's one I found that actually looks looks pretty nice for ¥3M (USD $21K). But the lease payments and administration fees probably scare away any prospective buyers (it's also in a forrest in one of the snowiest areas of Japan, so accessibility in winter might be a bit of an issue).
https://www.yuzawacorp.jp/detail/dtl.html?no=18094507
Maybe this is one reason why modern buildings are build, to get better cooling and heating and insulation.
> According to Nomura, a brokerage, the value of the average Japanese house depreciates to zero in 22 years. (It is calculated separately from the land, which is more likely to hold its value.)
This is talking about the assessed value of the house. It also implies that when a house reaches 22 years it is instantly knocked down and rebuilt, which is not true.
> The frequency of earthquakes also plays a part. Large tremors tend to be followed by tougher building regulations.
Even without the regulations, the level of destruction is hard to understand. Walking through a suburb of Kumamoto after the big earthquake in 2016 it seemed like every third house had partially collapsed. Landslides and flooding are also common.
Housing in Japan seems a world apart from housing in the UK. In Japan, I have lived in the same rented apartment with no rent increases for a decade. This is unimaginable in the UK. Strong tenants rights mean that once you are in a place you can more or less expected to be in there until you want to leave. The letter of the law on rent increases is that they must be justified by the surrounding market, but the cultural trend is to wait until a tenant has moved out.
Articles about cheap or free houses in the countryside of Japan pop up every now and again but the reality is most of these houses are worthless. Unoccupied, it only takes a few years for a leak to spring in the roof and the wooden house will rot away to nothing very quickly after that. They are located far from any kind of desirable jobs and services. Sometimes the owners, usually children who have moved to Tokyo for work, don't want to sell. I remember looking at one place, in a state of partial collapse, with the dates the family had come to visit written onto the wall by the front door. Yearly visits for over a decade but few repairs meant that the house probably wouldn't be around for much longer.
This is also because Japan has been at zero or negative inflation for the past decade, while the UK has not. Also, essentially the entire country outside of Tokyo is shrinking in population, which obviously depresses property prices.
I wish this was a significant effect, but my country peaked in population in the late 90s and had Japan-level fertility (and suicide BTW) rates since, but we got hit with the same insane housing price increases as everyone else.
Second chart shows average transaction prices per square metre in Warsaw - yellow is new apartments, blue indicates used:
https://zametr.pl/ceny-mieszkan/warszawa
Around 2017, when there was little to no inflation, prices started going up.
This can't be explained by things like the influx of Ukrainians, since that originally started en masse after the annexation of Crimea in 2014. Also there's no such effect in 2022.
What is known though is that starting in 2014 investment properties started becoming an increasingly large proportion of the market - going from single-digit percentages in 2012 to 42%+ right before the pandemic.
Yes, this is an annoyingly common misconception about Japanese housing. Just walking around a few random residential neighborhoods in Tokyo should disabuse anyone of the notion that homes here are all knocked down after a mere 22 years.
Buying secondhand homes here (whether stand-alone homes or condos) is very, very common. Misinformed articles like this are too common in western press.
Maybe housing broker has skin in the game to push people to sell their houses for 0 to the broker as a scam.
I don't think it implies that. It just implies that the real-estate market values the land about the same as the land and house combined.
Of course the current inhabitant might well value the house more than the market - selling a house and moving (or demolishing a house and rebuilding) is inconvenient and includes a lot of hefty fees and taxes after all - which is why people continue to live in their homes for years or decades after the value of the dwelling drops to nothing and even turns negative.
It's not only in Japan. I've seen this in other Asian countries as well. Perfectly good and relatively new building is destroyed to build another building that is not very different in size/structure.
I guess, it's something different in attitude towards environment. E.g. I wouldn't like my city to be rebuilt constantly. I like old buildings, history related to them. In Asia they probably feel different.
If you know the building will be torn down in 20 years, there's no point in spending $$$ on maintainability and long-life building materials.
And hence after 20 years, it might be thoroughly worn out.
Although telling this to my Japanese wife - whilst living in Japan and apartment shopping - doesn't stop her from thinking newer is better(despite obvious examples of this not being true).
Another factor is renovations: many buildings go through scheduled renovations after 20 years, which can be disruptive (you have to move out temporarily). A newer building is farther from that point.
I don't know about your wife's case. Some people believe earthquakes are like the lottery (and there are a few people who believe it's a god's will. Like Shintaro Ishihara after the 3.11 earthquake).
Taiwan also suffers from earthquakes (it's on Pacific ring of fire, just like Japan). But it doesn't change how people think of the long term values of houses. 40+ years old houses are traded on market just fine.
Here's a 30+ year old used single family home chosen basically at random, it was renovated in June 2023:
https://suumo.jp/chukoikkodate/kanagawa/sc_kawasakishikawasa...
Or if the seller doesn't have the money or motivation to renovate themselves, there are companies like this which will basically buy a house as-is and pay cash, and then renovate it and flip it:
https://www.real-to-hearts.jp/
Used homes listings like this can be found increasingly all over Japan, and I expect it to become increasingly common as older homes from the 80s and earlier (which do tend to be pretty crap in my experience and are not worth renovating) are torn down, and more homes from the 90s onwards (which tend to be pretty well-built and are worth renovating) enter the used home market.
For sure though I still see a lot of homes being torn down and new homes being built in their place (actually happening right outside my window as I write this). Or agricultural land being rezoned for new housing construction... often times right next to a vacant and decrepit old house.
https://www.youtube.com/watch?v=vIpnyz6FXxU&list=PL_4tRHMzlA...