Condo confidence

Since 2005 the general feeling has been that the used condominium market in Japan is crap. Actually, it’s always been crap, and this blog will eventually get to that, but in 2005 it was officially crap thanks to Hidetsugu Aneha, the structural architect who was found to have falsified earthquake-resistance data on a number of buildings he helped design. Consequently, these buildings were deemed unsafe and some have since been rebuilt at great expense to condo owners and builders. Another consequence is that people realized that Aneha probably wasn’t the only one falsifying data to save money on things like steel support beams. In 2006 Susumu Ojima, the president of condo developer Huser Ltd., was arrested for allegedly selling units that he knew had been built with faked earthquake-resistance data. 

Ojima was eventually convicted and appealed the decision. His second trial just ended today with the judge upholding the conviction, but no one seems to be paying attention anymore, what with the recession and all. Used condominiums saw a pretty big jump in sales last year.

According to the Asahi Shimbun, in 2008 there was a 22% increase in used condo sales for the three main metropolitan areas compared to 2007. In the Tokyo Metropolitan area alone, the increase was almost 38%. The reason is pretty simple: prices have been dropping steadily. In Dec. 2007 the average price of a 70 square meter unit in Tokyo was about ¥34 million. A year later this had dropped to about ¥29 million. Meanwhile, the number of new condominiums put on the market in 2008 dropped below 100,000 for the first time in 16 years, thus demonstrating a general slowdown in construction thanks to the recession. (Though it should be noted that often condos go on sale several years before they are actually completed.) Sales of new condos dropped by more than 26% in 2008.

 

When the Aneha-Huser scandal broke, some said it was the end of Japan, because there’s no way the country could survive an investigation into construction practices. Well, it obviously wasn’t the end of Japan. Condos continually improve in quality as time goes on, but considering how bad they were in the first place that isn’t saying much. People buy used condos, despite the fact that they’re crap and may even be dangerous, because they can’t afford to buy new ones. But experts have said that even if earthquake-resistance guidelines are followed nobody really knows if those buildings will stand until there is an earthquake. You might just as well live with it.

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