Cat Foreheads & Rabbit Hutches

On July 17 the Finance Ministry announced that in fiscal 2008 the amount of money the government received for sales of property it owned and which wasn’t in use was ¥66.5 billion, a 60 percent drop from the previous fiscal year. This is sort of serious since in 2005 the government, in order to reduce its debt, set a goal of raising ¥2.1 trillion over the next ten years from sales of government land, whether in use (think: those postal insurance hotels) or not in use. In 2006 and 2007, the government made about ¥220 billion per year in land sales and hoped to get at least ¥100 billion in 2008, but the recession and its attendant effect on land prices put a crimp in that plan. Of incidental interest to this blog is the fact that of the land owned by the government, 4,105 plots were obtained through payment in lieu of inheritance taxes, and that at the end of 2008 the combined book value of this property was ¥403.8 billion. Read More

Last night on the TV Tokyo news show Business Satellite, there was a report about used condos. The report said that during the first five months of the year 12,000 new condos went on sale of which 70 percent were actually sold. More importantly, 13,000 used condos were sold during this period. Real estate and housing industry people see this as a “trend” toward better sales of used condos. Read More

Back on Mar. 15, we posted an entry about the government’s new Flat 35 plan to stimulate property sales. The main new feature of the plan is that people who want to buy homes can borrow 100% of the money needed, meaning that they don’t have to make a down payment. A recent article in the Tokyo Shimbun talked about the inherent dangers of this plan, outlining what a typical family could expect to pay for the next 35 years if they buy a typical property usisng the plan. Though the interest rate is fixed, the writer of the article, one of Japan’s most noted housing experts, compared the situation it sets up to the situation caused by the spread of subprime loans in the U.S. Basically, he says that the purpose of the loan is to draw people into the housing market who don’t really make enough money to buy homes. Once they get into the market, they find they will have less money to pay for other things, like their children’s education. The government tried something similar in the 1990s with so-called “relaxed loans” and a lot people went bankrupt. He thinks Flat 35 will lead to even more.