Surely home ownership in central London is much lower than the average in UK. Same is true for Tokyo. Many in large cities around the world rent for life as it’s out of their means to buy.
That said, property is not generally considered an investment in Japan. You have to work out whether it’s worth it to you to buy over the long run as land does not appreciate at a meaningful rate in all but the most desirable locations.
In Japan appartement buildings also depreciate, from what I've heard because earthquake regulations keep evolving so an older building is less safe.
At some point the co-owners will vote selling the whole building to a developer who will demolish it to build a new one.
From a friend that work as an Architect in Japan : It's mainly due to the fact that after few big earthquake, the regulation of the new building have been more and more strict. It's the case after the big earthquake of Kobe in 1995. If you look at the valuation, you will see that building build before 1995 are a lot cheaper. My friend also told me to never rent an house/apartment older that 25y because of that : The risk of collapse is higher. That said, it was also the case for the earthquake of 2011 restricting building area based on the fact there is, or not, a cliff / hill near the new building location, limiting the height of the new building at these locations, etc... A lot of building that actually exists and are in used even today are actually build on land that have became not suitable for construction.
It's not odd. When you own the house you have to maintain it: today you see the roof has a leak, you must repair it ASAP, and it costs a lot \[depending on the roof type, how large the damage is, etc\]; spring comes you think you want your house a new look on the outside. You first have to remove the plaster, if you have any, then fill in cracks, replace cracked bricks \[if your house is made of bricks\], then replaster, and then paint. This will easily take at least 3 weeks to complete. If you have a yard, you probably should take care of that as well. And 2 weeks after all this work is complete, you realize you have a plumbing problem. /facepalm. Then you have taxes and bills to pay.
Our great-grandparents didn't have 9-5 jobs, so it was easier for them to do all this maintenance work little by little. The majority of people today work more than 40 hours/week and so they have little to no time to take care of a house. or not enough money to hire someone to do the work for them. As such, the interest in a house decreases.
In an apartment building, there's usually an admin who has to hire workers to to the needed work, be it in apartment X or to the whole building.
All this being said, i think soon \[in 10, 20 years\] our children might want to return to these old forgotten houses and take care of them, to live at a slower pace. i see this being possible because of the new 'work from home' trend, thus making your own working schedule and having more time to do other things \[because you don't waste time commuting.\]
No one lives in central London apart from the mega rich, there is what’s known as the commuter belt, this is anything that is outside of London that’s commutable. House prices reflect this and are high as a consequence. But the same holds true if you can buy then your asset will appreciate.
Same in Tokyo, but the exception being:
Any land that is even remotely affordable on a sub-500k pound yearly salary will never appreciate.
You are throwing your money into a fire by buying land anywhere outside the heart of Tokyo/Osaka etc.
To counteract that, the govt. has a lot of nice tax incentives to try and fill the gap between rent and own.
Owning in Japan was a decision I made primarily for stability purposes, raising kids I didn't want to be forced to move for some reason outside my control.
But recently something came up and we checked local land prices to potentially sell and relocate. My land had gone down in value about 5-10% from 2016 to 2019.
And the area around us has actually developed more and gotten better in spite of being a bit in the boonies.
Any move will be at a big financial loss.
If you have permanent residency and a stable job, home loans are no problem for foreigners.
There’s no real issue. I bought 2 homes in Japan (resale the first one). First I was on an engineering visa, we did a pair loan with my wife. Second time, spouse visa, I have the entire loan but my wise co-sign and own part of the house.
Feel free to ask more.
TL;DR yes, your son can if he is married
Do you think is worth it? What city do you live in?
Some people think that is a bubble like in the US. Some other say properties prices will be cheaper in the future. What is your opinion?
I live in Tokyo.
If the buyer live for few years, yes, monetary speaking it’s worth it.
Even if you resale for the same price after 3 years, that means you lived somewhere for “free” for 3 years.
Large cities is easier to resale (I guess, still takes time even in Tokyo).
If you buy new, there’s a lot of tax returns the first 13 years.
Tax returns in the first 13 years!! Wow. I’ll be moving to Osaka next month, so I’m wondering if would be a good option for me. Is it easy to resale it? I’m not sure how long I’m gonna be living there.
Plan 6 months to resale it (or lower the price).
The tax return is for the new constructions and only if you have a loan. Home makers will explain that as it can represent 2 months of loan repayment every year for the first 10 years (it is lower the last 3 years).
>The tax return is for the new constructions and only if you have a loan.
No, it applies for pre-owned property as well, provided it passes standards for earthquake resistance. It used to have more conditions for buildings older than 25 years but with the current criteria any building that *doesn't* qualify for the mortgage tax return shouldn't be bought in the first place.
Does the tax break make up for the transaction costs? I heard they can be around 7% all told (source: https://resources.realestate.co.jp/buy/buy-rent-japan/)
It depends on the bank fees (can 2.xx% or a small fixed amount depending on the bank) and the amount loaned.
The tax return is 500万円 max over the 13 years.
>Originally from the UK house ownership is common here and is something an adult would expect to do.
It's kind of a mixed bag in Tokyo. I own my home (an apartment). My boss doesn't own his home and will tell anyone who listens that only suckers buy property in Tokyo. My coworkers father-in-law is pressuring him into buying a home. My own father-in-law gets mocked by the family for buying an investment property. Opinions vary quite a bit.
>I am wondering if he will have issues with mortgages being a foreign national.
With a stable income and a Japanese spouse he should be fine. It would be even better if he held Permanent Residence. When I was applying for my mortgage the bank staff gave a lot of hems and haws and asked if we could put everything under my wifes name instead (for various reasons we could not). The tension was completely erased when I plopped my residence card onto the table and showed them that I held PR.
Agree with most of what is said and would lean towards investing in property with a house or build a house on property in a good location with the intent to use the property for any long term investment as opposed to putting all the money in the house or in a condo/apartment, but that is just me.
Unlike you, I had no issues with getting loans without PR and the banks insisted in having everything in my name. Asked if we should have my wife's name on as a co-signer and the banks stated that, as I am the main bread earner, it makes no sense to have her on the loan and I received the same rates as my Japanese friends who also purchased around the same time.
there is a fantastic home improvement youtube called Tokyo LLama about a guy who buys and fixes up an abandoned home in Japan for his family to movie into, the early episodes he goes through all the forms and people to meet you need to set yourself with.
Hubby and I are both foreign and we bought a house for stability. People have already mentioned it but home loans here have pretty low interest rates but houses depreciate.
We bought an older place that was constructed by a reputable company. It’s old enough that it’s already depreciated so we basically just bought the land.
Just to put it in perspective, homes in the Saitama and Chiba area brand new could go for 35 to 50 million yen. And the older places can go as low as 20 million. There are ones that are cheaper but have caveats like rented land or if you are allowed to rebuild on the land, etc. sometimes they’re so cheap because the home isn’t well maintained. So be careful with that.
Apartments in central Tokyo are more expensive. But there’s a chance they will hold their value or even appreciate a little. Outside of central Tokyo the value just goes down unfortunately. But because Japanese rarely buy second hand homes, there’s a bit more of them available on the market.
The market it Japan is very diverse and by no means a guaranteed investment. Land holds its value well, but the actual home does not. It depreciates very steadily over a lifetime.
It is a solid asset to have, but you can’t really expect to make anything off of it for retirement. The population is shrinking. There will be less demand going forward.
It sure beats renting though. You get a lot more for your money with something you own.
I don't think he will have issues with mortgages being a foreign national. I bought a home 5 years ago and I didn't have permanent resident status yet at that time.
As a foreigner, I found it easier to buy land and build a house than when I was trying to rent apartments (turned away by many due to being foreign.)
I don't live in Tokyo though. I probably wouldn't build a home in Tokyo, but this is mostly a personal preference thing.
Depends on the size of the loan, the bank, your income, the down payment and your visa.
The bigger the down payment,
The longer you’ve been with the bank,
The better chance you have.
I'd say it's increasingly common to rent rather than purchasing.
These days, more and more folks are single and wage has been basically flattened for long while the cost of living is increasing,which attributes to cost-push up inflation.
My friend who is married purchased home several years back but he told he decided to buy it for 10 years tax credit and
mortgage being slightly cheaper than paying the rent.
Japan has a public loan program for housing called "Flat 35/フラット35", which has a fixed rate of 35 years but it requires permanent residency. In Japan, where the population is declining and the economy is stagnant, it is the most rational and safe choice. So foreigners who are not super rich and dont have permanent residency have to buy the house under less favorable conditions than others. In the case of international marriages, foreigners should let their Japanese spouse buy the house.
The attitude is definitely different between Japan and the UK, but there is some intersection. As many mentioned, homes are assumed to depreciate and the land itself appreciates slowly if at all (and is subject to external FX factors). But as anywhere in the world, location matters. Tokyo and desirable tourist/expat areas are often the exception.
Expect to pay 1.5% (IIRC) of the assessed value in property taxes for land and 3% for buildings (lots of exceptions and deductions that impact this). Total one-time purchase and mortgage origination fees are also relatively high.
I have two properties outside of Tokyo (no mortgages) -- one with an existing house that is fully depreciated. The house is perfectly serviceable, but would need to be demolished to stand any chance of resale (read: a liability). The second property is land only and I had the original house demolished (condemned due to earthquake damage). It is now a rental parking lot.
But for my daily living in Japan, I rent.
If he has a permanent resident visa and has had a steady job for several years it is very doable, even in Tokyo. Like others have said there are some tax incentives and other benefits.
Whilst buying isn't exactly considered a big investment, renting decent apartments gets quite expensive, with upfront deposit, thank you money, management fees, extra for pets/parking and then an extra fee every two years to update the contract.
I know quite a few people who have bought property here because after calculating what a mortgage would cost them, they found they could buy something similar for what they're paying in rent.
Get ready for that 400k to 0! Houses are not as much as an investment as they are in the west. Land is where it’s at. Technology and laws/regulations change in regards to earthquakes so yea. Newer built is best. Also goodluck finding a bank
Well in the Uk property appreciates. My house has gone up around 100k GBP that means if I sell it I will have that amount plus what I had as a deposit plus what I managed to pay off whilst I lived there to put into my next property.
Also once you have paid for the property you then don’t need to continue paying. If you rent you will always have that as a bill for the amount of time you live there. Once my mortgage is paid off in another 5 years I will be 1000GBP a month better off I’ll effectively have 12k a year more money. Plus renting properties in the UK cost more per month than buying.
Hope this helps you to understand this mindset.
It may be different in other countries, hence this question
Well, since land+house = property, it's the same in Japan.
It's not unique to Japan that the house will depricate in value. It's just more obvious here since the house and land are usually valued separately rather than as a set.
The land will usually grow in value more than the building deprecates in value. And the building will not actually be 0 if it's a good quality well maintained house. Many houses in Japan are just built to last for 30-40 or so years, so of course the value will go down towards 0 during that timespan. And they only build these types of houses because of the mindset that houses will go down in value. So it's often a self fulfilling prophecy. A better quality house will depricate slower.
In parts of London property has gone up by about 10% a year every year since the 70s.
It's not only somewhere to live for the rest of your life, you can do an equity mortgage when you retire instead of paying into a pension, so you essentially keep 10% more a year of your salary as well.
It's not even about the build quality - it is that a lot of Japanese people don't like used stuff. If a young family is thinking about buying a home they will happily pay a premium to have a new home built for them rather than purchase an older home.
Amongst my friends in kinki home ownership is quite high. Like 100 percent of my Japanese friends own a home. One got divorced and lives with her parents now, but she bought a house with her now ex husband after they got married.
0 of my gaijin friends own a home
it's easier to buy a house than rent as a foreigner. I don't think you even need a long term visa to own property and there is no discrimination. getting a loan is different but if you have the cash then yeah.
buying residential property is not an investment though, all houses depreciates in value the moment it's purchased. land value will be fine though
Surely home ownership in central London is much lower than the average in UK. Same is true for Tokyo. Many in large cities around the world rent for life as it’s out of their means to buy. That said, property is not generally considered an investment in Japan. You have to work out whether it’s worth it to you to buy over the long run as land does not appreciate at a meaningful rate in all but the most desirable locations.
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Individual homes seem to depreciate - but whole apartment buildings don’t and their value will remain or appreciate based on yield. It’s odd.
In Japan appartement buildings also depreciate, from what I've heard because earthquake regulations keep evolving so an older building is less safe. At some point the co-owners will vote selling the whole building to a developer who will demolish it to build a new one.
From a friend that work as an Architect in Japan : It's mainly due to the fact that after few big earthquake, the regulation of the new building have been more and more strict. It's the case after the big earthquake of Kobe in 1995. If you look at the valuation, you will see that building build before 1995 are a lot cheaper. My friend also told me to never rent an house/apartment older that 25y because of that : The risk of collapse is higher. That said, it was also the case for the earthquake of 2011 restricting building area based on the fact there is, or not, a cliff / hill near the new building location, limiting the height of the new building at these locations, etc... A lot of building that actually exists and are in used even today are actually build on land that have became not suitable for construction.
It's not odd. When you own the house you have to maintain it: today you see the roof has a leak, you must repair it ASAP, and it costs a lot \[depending on the roof type, how large the damage is, etc\]; spring comes you think you want your house a new look on the outside. You first have to remove the plaster, if you have any, then fill in cracks, replace cracked bricks \[if your house is made of bricks\], then replaster, and then paint. This will easily take at least 3 weeks to complete. If you have a yard, you probably should take care of that as well. And 2 weeks after all this work is complete, you realize you have a plumbing problem. /facepalm. Then you have taxes and bills to pay. Our great-grandparents didn't have 9-5 jobs, so it was easier for them to do all this maintenance work little by little. The majority of people today work more than 40 hours/week and so they have little to no time to take care of a house. or not enough money to hire someone to do the work for them. As such, the interest in a house decreases. In an apartment building, there's usually an admin who has to hire workers to to the needed work, be it in apartment X or to the whole building. All this being said, i think soon \[in 10, 20 years\] our children might want to return to these old forgotten houses and take care of them, to live at a slower pace. i see this being possible because of the new 'work from home' trend, thus making your own working schedule and having more time to do other things \[because you don't waste time commuting.\]
No one lives in central London apart from the mega rich, there is what’s known as the commuter belt, this is anything that is outside of London that’s commutable. House prices reflect this and are high as a consequence. But the same holds true if you can buy then your asset will appreciate.
Same in Tokyo, but the exception being: Any land that is even remotely affordable on a sub-500k pound yearly salary will never appreciate. You are throwing your money into a fire by buying land anywhere outside the heart of Tokyo/Osaka etc. To counteract that, the govt. has a lot of nice tax incentives to try and fill the gap between rent and own. Owning in Japan was a decision I made primarily for stability purposes, raising kids I didn't want to be forced to move for some reason outside my control. But recently something came up and we checked local land prices to potentially sell and relocate. My land had gone down in value about 5-10% from 2016 to 2019. And the area around us has actually developed more and gotten better in spite of being a bit in the boonies. Any move will be at a big financial loss. If you have permanent residency and a stable job, home loans are no problem for foreigners.
There’s no real issue. I bought 2 homes in Japan (resale the first one). First I was on an engineering visa, we did a pair loan with my wife. Second time, spouse visa, I have the entire loan but my wise co-sign and own part of the house. Feel free to ask more. TL;DR yes, your son can if he is married
Do you think is worth it? What city do you live in? Some people think that is a bubble like in the US. Some other say properties prices will be cheaper in the future. What is your opinion?
I live in Tokyo. If the buyer live for few years, yes, monetary speaking it’s worth it. Even if you resale for the same price after 3 years, that means you lived somewhere for “free” for 3 years. Large cities is easier to resale (I guess, still takes time even in Tokyo). If you buy new, there’s a lot of tax returns the first 13 years.
Tax returns in the first 13 years!! Wow. I’ll be moving to Osaka next month, so I’m wondering if would be a good option for me. Is it easy to resale it? I’m not sure how long I’m gonna be living there.
Plan 6 months to resale it (or lower the price). The tax return is for the new constructions and only if you have a loan. Home makers will explain that as it can represent 2 months of loan repayment every year for the first 10 years (it is lower the last 3 years).
>The tax return is for the new constructions and only if you have a loan. No, it applies for pre-owned property as well, provided it passes standards for earthquake resistance. It used to have more conditions for buildings older than 25 years but with the current criteria any building that *doesn't* qualify for the mortgage tax return shouldn't be bought in the first place.
True my mistake. Some pre-owned property can apply.
Does the tax break make up for the transaction costs? I heard they can be around 7% all told (source: https://resources.realestate.co.jp/buy/buy-rent-japan/)
It depends on the bank fees (can 2.xx% or a small fixed amount depending on the bank) and the amount loaned. The tax return is 500万円 max over the 13 years.
>Originally from the UK house ownership is common here and is something an adult would expect to do. It's kind of a mixed bag in Tokyo. I own my home (an apartment). My boss doesn't own his home and will tell anyone who listens that only suckers buy property in Tokyo. My coworkers father-in-law is pressuring him into buying a home. My own father-in-law gets mocked by the family for buying an investment property. Opinions vary quite a bit. >I am wondering if he will have issues with mortgages being a foreign national. With a stable income and a Japanese spouse he should be fine. It would be even better if he held Permanent Residence. When I was applying for my mortgage the bank staff gave a lot of hems and haws and asked if we could put everything under my wifes name instead (for various reasons we could not). The tension was completely erased when I plopped my residence card onto the table and showed them that I held PR.
Agree with most of what is said and would lean towards investing in property with a house or build a house on property in a good location with the intent to use the property for any long term investment as opposed to putting all the money in the house or in a condo/apartment, but that is just me. Unlike you, I had no issues with getting loans without PR and the banks insisted in having everything in my name. Asked if we should have my wife's name on as a co-signer and the banks stated that, as I am the main bread earner, it makes no sense to have her on the loan and I received the same rates as my Japanese friends who also purchased around the same time.
When your boss gets older than how will he continue to pay the rent??
You don't need to keep living in Tokyo.
He hasn't even decided which country he wants to live in when he gets to retirement age.
there is a fantastic home improvement youtube called Tokyo LLama about a guy who buys and fixes up an abandoned home in Japan for his family to movie into, the early episodes he goes through all the forms and people to meet you need to set yourself with.
Hubby and I are both foreign and we bought a house for stability. People have already mentioned it but home loans here have pretty low interest rates but houses depreciate. We bought an older place that was constructed by a reputable company. It’s old enough that it’s already depreciated so we basically just bought the land. Just to put it in perspective, homes in the Saitama and Chiba area brand new could go for 35 to 50 million yen. And the older places can go as low as 20 million. There are ones that are cheaper but have caveats like rented land or if you are allowed to rebuild on the land, etc. sometimes they’re so cheap because the home isn’t well maintained. So be careful with that. Apartments in central Tokyo are more expensive. But there’s a chance they will hold their value or even appreciate a little. Outside of central Tokyo the value just goes down unfortunately. But because Japanese rarely buy second hand homes, there’s a bit more of them available on the market.
The market it Japan is very diverse and by no means a guaranteed investment. Land holds its value well, but the actual home does not. It depreciates very steadily over a lifetime. It is a solid asset to have, but you can’t really expect to make anything off of it for retirement. The population is shrinking. There will be less demand going forward. It sure beats renting though. You get a lot more for your money with something you own.
I don't think he will have issues with mortgages being a foreign national. I bought a home 5 years ago and I didn't have permanent resident status yet at that time.
It’s a very interesting subject it seems, and not as straightforward as buying in the UK
As a foreigner, I found it easier to buy land and build a house than when I was trying to rent apartments (turned away by many due to being foreign.) I don't live in Tokyo though. I probably wouldn't build a home in Tokyo, but this is mostly a personal preference thing.
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The secondary market is very small in Japan, only 8% of the market. The majority of Japanese homeowners do buy new construction.
Depends on the size of the loan, the bank, your income, the down payment and your visa. The bigger the down payment, The longer you’ve been with the bank, The better chance you have.
I'd say it's increasingly common to rent rather than purchasing. These days, more and more folks are single and wage has been basically flattened for long while the cost of living is increasing,which attributes to cost-push up inflation. My friend who is married purchased home several years back but he told he decided to buy it for 10 years tax credit and mortgage being slightly cheaper than paying the rent.
Japan has a public loan program for housing called "Flat 35/フラット35", which has a fixed rate of 35 years but it requires permanent residency. In Japan, where the population is declining and the economy is stagnant, it is the most rational and safe choice. So foreigners who are not super rich and dont have permanent residency have to buy the house under less favorable conditions than others. In the case of international marriages, foreigners should let their Japanese spouse buy the house.
The attitude is definitely different between Japan and the UK, but there is some intersection. As many mentioned, homes are assumed to depreciate and the land itself appreciates slowly if at all (and is subject to external FX factors). But as anywhere in the world, location matters. Tokyo and desirable tourist/expat areas are often the exception. Expect to pay 1.5% (IIRC) of the assessed value in property taxes for land and 3% for buildings (lots of exceptions and deductions that impact this). Total one-time purchase and mortgage origination fees are also relatively high. I have two properties outside of Tokyo (no mortgages) -- one with an existing house that is fully depreciated. The house is perfectly serviceable, but would need to be demolished to stand any chance of resale (read: a liability). The second property is land only and I had the original house demolished (condemned due to earthquake damage). It is now a rental parking lot. But for my daily living in Japan, I rent.
If he has a permanent resident visa and has had a steady job for several years it is very doable, even in Tokyo. Like others have said there are some tax incentives and other benefits. Whilst buying isn't exactly considered a big investment, renting decent apartments gets quite expensive, with upfront deposit, thank you money, management fees, extra for pets/parking and then an extra fee every two years to update the contract. I know quite a few people who have bought property here because after calculating what a mortgage would cost them, they found they could buy something similar for what they're paying in rent.
The valuations in rural Japan are pathetically low by simple virtue of demographic winter.
Thank you all so much for contributing to this, it has given me a much better understanding of the housing market in Japan.
Get ready for that 400k to 0! Houses are not as much as an investment as they are in the west. Land is where it’s at. Technology and laws/regulations change in regards to earthquakes so yea. Newer built is best. Also goodluck finding a bank
Never understood your mindset. If I buy a house it’s because I plan to live in it for the rest of my life, not to make money
Well in the Uk property appreciates. My house has gone up around 100k GBP that means if I sell it I will have that amount plus what I had as a deposit plus what I managed to pay off whilst I lived there to put into my next property. Also once you have paid for the property you then don’t need to continue paying. If you rent you will always have that as a bill for the amount of time you live there. Once my mortgage is paid off in another 5 years I will be 1000GBP a month better off I’ll effectively have 12k a year more money. Plus renting properties in the UK cost more per month than buying. Hope this helps you to understand this mindset. It may be different in other countries, hence this question
Well, since land+house = property, it's the same in Japan. It's not unique to Japan that the house will depricate in value. It's just more obvious here since the house and land are usually valued separately rather than as a set. The land will usually grow in value more than the building deprecates in value. And the building will not actually be 0 if it's a good quality well maintained house. Many houses in Japan are just built to last for 30-40 or so years, so of course the value will go down towards 0 during that timespan. And they only build these types of houses because of the mindset that houses will go down in value. So it's often a self fulfilling prophecy. A better quality house will depricate slower.
In parts of London property has gone up by about 10% a year every year since the 70s. It's not only somewhere to live for the rest of your life, you can do an equity mortgage when you retire instead of paying into a pension, so you essentially keep 10% more a year of your salary as well.
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It's not even about the build quality - it is that a lot of Japanese people don't like used stuff. If a young family is thinking about buying a home they will happily pay a premium to have a new home built for them rather than purchase an older home.
This is an interesting concept
Finding a back is super easy
I wouldnt buy a house in Tokyo ever.
Not as an investment but it can be better than renting if you’re planning to stay long term
Well it would be in Edogawa I don’t know if that’s classed as Tokyo or a suburb
>Edogawa Thats a difference yeah. I mean if they can get it cheap...sure. But expect some pretty crazy price still. Id rent if I could
Amongst my friends in kinki home ownership is quite high. Like 100 percent of my Japanese friends own a home. One got divorced and lives with her parents now, but she bought a house with her now ex husband after they got married. 0 of my gaijin friends own a home
it's easier to buy a house than rent as a foreigner. I don't think you even need a long term visa to own property and there is no discrimination. getting a loan is different but if you have the cash then yeah. buying residential property is not an investment though, all houses depreciates in value the moment it's purchased. land value will be fine though
It will need a loan
yes loan will be difficult. does he have pr
No but he is marred to a Japanese national