Month: March 2025

Not buying it

Posted on by catforehead

The home ownership rate in Japan has stayed around 60 percent for the past five decades, a bit less than the world average. However, according to the Paris-based global market research company, IPSOS, that rate may be dropping in the near future. 

Recently, IPSOS conducted a survey of 22,000 people in 30 countries and found that the “desire” for home ownership was the lowest in Japan. About 42 percent of the Japanese people surveyed who do not presently own homes said they were planning to buy a home in the future. The average among the 30 countries was 71 percent, with the U.S. at 68 percent and Germany just above Japan at 48 percent. 

Of the reasons given for not planning to buy a home, the most common among Japanese respondents was high taxes, mentioned by 52 percent. The world average of people saying that high taxes was a reason for not buying a home was 28 percent. Italy was closest to Japan at 42 percent. The second most cited disincentive in Japan was the high price of property. 

Broken down further, 68 percent of the Japanese respondents said they wanted to buy a home but didn’t think they would be able to afford it. About the same percentage of Germans and Australians said the same thing. Of course, the real question here is how many people do not even want to buy a home, which would tell us more about people’s attitude toward investing for the future. As we’ve said in this blog many times, outside of the main big cities, one’s home is not an investment in terms of getting anything back from it in the long run, so while home ownership does have advantages over renting, mainly that it gives one a guaranteed place to live, in terms of money spent there may not be enough of a difference, something more people may be realizing these days. 

Coincidentally or not, the land ministry also conducted a survey in late 2023 whose results were reported in the housing magazine Suumo in February. The ministry surveyed 72,000 heads of household nationwide covering all ages and incomes, with 72.4 percent of respondents owners of their homes and 27.6 percent renters. 

In terms of satisfaction, 79 percent of the homeowners said they were satisfied with their present situation, while 74 percent of renters said the same thing. However, when asked about the future, the results were startling. To the question, “If you were to move again, which would you prefer: owning or renting?” Only 33 percent of both categories said they wanted to own while 49 percent said they wanted to rent. According to Suumo, this is a huge change since 2003, when the land ministry conducted a similar survey. Almost all the respondents in that survey said they preferred to own. Broken down a bit further, most of the owners and renters who said they wanted to own their next abode said they would prefer a new home, but there was a notable increase over previous surveys in respondents who said they would be fine buying a used home. 

One reason for the presumed high portion of homeowners who said they would rent if they moved is the fact that almost half the heads-of-household surveyed were over 64, meaning they have likely lived in the same place their entire homeowning lives and probably think they don’t need to purchase another one in their old age. One stone cold statistic that’s always been true of Japanese housing is that the older the cohort, the higher the home ownership rate, so the real question is, how do today’s home ownership rates among people still in their so-called productive years compare to those in the past? The IPSOS survey would seem to indicate that it’s not as much and will continue to decline. 

Time bombs

Posted on by catforehead

For years we have been writing about the future of Japan’s condominiums, which is dire. Though condos continue to sell relatively well in Japan, especially in Tokyo where prices for new ones continue to break records, evidence is ever mounting that the life spans of the buildings themselves are more limited than most people previously thought, if, in fact, they thought of it at all. And while much of this problem is demographic in nature—Japan’s declining population is certainly a factor—the real culprit is everyday economics. The cost of maintaining the buildings so that they will be attractive to future buyers is usually too much for the people who do buy them, and so they aren’t kept up.

Now the Japanese media is finally coming around to this realization in a concerted way, as exemplified by the Japan Times, for which we once wrote a monthly housing column, running a feature about the difficulties being faced by condo owners as their properties slowly fall apart. Soon, they will be abandoned in increasing numbers, just like millions of single-family houses throughout Japan. However, the best coverage of this phenomenon we’ve seen so far was a multi-part series in the Asahi Shimbun about “shukatsu mansion,” with “mansion” being the foreign loan word used for condominiums as promoted by the real estate industry, and “shukatsu” an in-vogue word at the moment representing the increasingly valid idea of the importance of end-of-life planning. In other words, owners of older condominiums are facing the fact that they will be the last owners of their units, because not only will no one want to buy them, but they may not even be inhabitable. 

The Asahi refers to these condos as “time bombs,” and while most are forty years old, a few are newer. One article focuses on a 19-unit, 30-year-old building in Kawasaki that’s a 15-minute walk from a station on the Odakyu Line. The design is terrace-style, which was popular in the 1990s and costs more to maintain and repair than conventional apartment buildings. The original buyers carried out large-scale repair work using funds from their saved shuzenhi (repair fee) contributions in the past, and the present owners say they need to do it again. One member of the homeowners association (HOA) told Asahi that they are thinking of “rebuilding” the whole thing, meaning they would tear down the present building and then construct a new one, hopefully with extra units whose sale can offset some of the rebuilding cost for present owners. However, when they hired a consultant to estimate how much such a rebuilding would cost each owner, they were shocked with the answer: ¥47.4 million. The average age of the present owners is somewhere in the 60s, meaning many are living on fixed incomes, which would make it not only impractical to spend that kind of money but impossible. The main problem is the capacity rate, meaning the amount of condo floor area that can be built in relation to the amount of land the building occupies. When the condo was originally built, it took up the maximum capacity allowed, and the local government has not changed regulations since then (many other local governments have done so in recent years in order to attract more developers). So they can’t add new units to a new building unless they reduce the floor area of all the new units.

Another problem is the 15-minute walk to the station, which in today’s market is considered far. It will become increasingly difficult to sell any of the units to someone who still needs to commute to Tokyo, unless they price the units much lower than what it would cost to build them. Consequently, it will be difficult to get a developer involved in the rebuilding, since there wouldn’t be much profit in it for them. 

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