Wood if you could

Saitama prefecture contains a good portion of Tokyo bedroom communities, but it also has a lot of forests, and recently the prefectural government announced a plan to increase the amount of locally produced lumber that is used for new houses. Starting in June, the prefecture will accept applications for subsidies from residents who plan to build or buy new houses. The prefecture will pay up to one percent of the interest on housing loans for up to five years if the house being bought or built contains lumber grown and milled in Saitama.

There are other conditions. The houses must be built by local contractors and cannot be prefabricated. Also, the house must cost at least ¥20 million. There is no limit to the household income for applicants, but only 2,000 people will be approved for the loan subsidy. Also, it should be noted that this plan is not a tax deduction, but a straight cash subsidy. As an example, the prefecture has said that if a person is building a house for ¥25 million then the subsidy will probably be about ¥14,000 a month toward the mortgage payments, depending on the actual wood content of the house. 


Japanese houses are famous for not lasting very long–usually only 30 years, which is particularly short considering that most mortgages are 35. However, the more wood that a house contains, the higher its value, and also the higher the subsidy in this case. However, the subsidy has less to do with encouraging a higher quality of housing stock than with stimulating the timber and lumber business in the region. Japan’s forestry industry has always been poorly managed. One of the reasons Japanese wood is prohibitively expensive is that the government does not take proper care of its forests, and so harvesting trees is expensive and dangerous. Nevertheless, the quality of the wood is better than the wood imported from Southeast Asia and which is used in the vast majority of new homes in Japan. In theory, the cost of a house made with imported wood is probably still a lot less than a house made with domestic wood with the new subsidy factored in. But it may be a step in the right direction.

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