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Japan 2022 average condo price hits record high for 6th year in row

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That's expensive and worst of all, when you come to sell it in 30 years time, what's it going to be worth?

I'd rather have a house and some land.

11 ( +12 / -1 )

The price, up 0.1 percent from the previous year,

It's modest compared to rate of current inflation.

-4 ( +1 / -5 )

why would anyone in their right mind buy an apartment here?

8 ( +13 / -5 )

when you come to sell it [the condo] in 30 years time, what's it going to be worth?

This is perhaps a more important question to ask about a 30-year-old wood-frame house, isn’t it?

0 ( +6 / -6 )

One thing that is missing here is the increase in real estate prices. Sure construction costs have risen, but land prices have as well. Inflation is being blamed for much of it, but the roots go back further.

3 ( +4 / -1 )

I thought of buying in Tokyo but when you think of the big one hitting Japan [ Earthquake ], I opted out.

-1 ( +5 / -6 )

why would anyone in their right mind buy an apartment here?

Because it will hold its value way better than a house ever will.

-8 ( +2 / -10 )

Will never live in a high rise again having experienced several earthquakes in Japan.

3 ( +5 / -2 )

If the company pays for the rent, it's okay to live in a condo unit. If it's on personal mortgage, it's stupid to invest on it here in Tokyo. Better find a house in the suburb.

5 ( +5 / -0 )

Is it better to live by renting? Serious decision to have to make soon.

Prices of houses in Chiba seem reasonable at 40mil for a new 3 bedroom, easy station access, close to Tokyo. Maybe it's wise to make the decision to buy sooner rather than later? Wages will increase soon enough... no?

0 ( +0 / -0 )

I don't know much about how real estate works in Japan. Certainly know how it works in Australia. Buy low sell high. If you bought property in the late 80s and 90s and still have it you will be very pleased with how it's valued has soared!

2 ( +3 / -1 )

That sounds pretty cheap.

-1 ( +0 / -1 )

At that price for a condo, why are people complaining so much about low wages?

-1 ( +1 / -2 )

Funny thing is, so-called Japanese real-estate analysts have been saying for many years now that the housing market will come down (after the Olympic, after the wealth transfer, etc.) and houses will become more affordable.

One thing that bothers me about purchasing a condo in Tokyo is the lack of amenities most manshons come with despite the expensive monthly kanri-hi, tsumitate-kin, and parking. Hardly see any pools or gyms unless you intend on purchasing luxury manshons.

3 ( +3 / -0 )

Logic for mansions;

1) Aging & Shrinking family size 2) Community/Safety 3) Ease/Comfort/maintenance-lite 4) Income generation/easy to rent out 5) no financing/purchase of land 6) growth of ecommerce/delivery 7) car's less necessary 8) building construction MUCH tougher for earthquakes/highly regulated 9) superior location 10) better views

KEY - Living with Owners WAY better than Renters - basis for 'community'/good behavior

KEY - Cheap to buy supplemental earthquake insurance, buildings also have coverage

KEY - Building Maker/Mgmt. matters, track record, size and reputation etc.

Bottom line in Japan today, it's a far safer investment because all the trends are favorable/see above. Land prices on any basis have been falling since 1990 and not likely changing anytime soon. Live in nice Tokyo neighborhood, large houses basically unwanted, tons of lonely old people with heavy maintenance burden, same category of elderly people in our mansion MUCH happier to person, socially active etc.

Just look around/grass roots, doubt anywhere in Japan can you find market where of the 'new' units being built at LEAST 90% are not mansions, that's no accident/market logic and fyi, given 'real' inflation, tiny 0.1% price increase is 'real' price decrease

Like any 'investment', timing's key, anyone can over-pay. Best to buy slightly used place in 'down' economy with building having little turnover - happy owners, who tend to rent out if relocating rather than sell. In my case observed several renters convince owners to sell to them, as original owners later determined they'd not be returning. They saved lots of agent fees, best to try to negotiate in advance a lease to buy option in a contract I would assume but not necessary. My case, rich lady couldn't convince her child to return to Japan with a free place, used it as an art studio before giving up, perfect condition etc.

Run numbers with tax benefits etc. need cash flow 'return'/rent savings greater than 5%, 10% should be doable if sharp. With mortgage interest tax benefit, can borrow interest free for years depends on tax code timing, huge bonus now that inflation's 'hot'.

Most expensive advice's 'free', that being case, suspect mansion market for buyers will gradually improve as economy grinds to halt, as BOJ can't keep printing Yen at this rate, so if looking to buy (I'm not), next couple years could be far better entry point than last few years, as Japan's policy-makers want inflation to run hot for variety of reasons

Hope above helps, do it right you'll get real and almost risk-free daily annuity 'return' on your investment and quality of life. If you think land's good investment, think again as mansions popular as NOBODY wants land given accelerating depopulation and aging

3 ( +6 / -3 )

Given the low mortgage rates in Japan, you can get better bang for your buck by buying. On a 35-year, 50 million yen mortgage @0.5%, you will be paying around 130,000 yen per month. Whereas the same condo would likely cost at least 200,000 yen pm to rent.

Add in the depreciation expense (if you work from home) as well as the home loan tax deduction, and it makes sense to buy if you are planning to stay in Japan for the long term.

5 ( +5 / -0 )

It’s a great investment if you buy straight up with no mortgage. Anything in Japan with a mortgage attached is not an investment, it’s a divestment.

-2 ( +1 / -3 )

Where I live you can buy a new 4LDK house with a garden and parking for ¥30-¥40 million.

1 ( +3 / -2 )

West Hyogo on the sea. Clean air.

2 ( +3 / -1 )

wallaceToday  10:52 am JST

West Hyogo on the sea. Clean air.

Good to know.

But for those prices, you would be getting taken to the cleaners.

0 ( +1 / -1 )

RKL

wallace

West Hyogo on the sea. Clean air.

> Good to know.

Why? It is just more of your doxxing attempts to search out personal info on posters.

But for those prices, you would be getting taken to the cleaners.

We don't need cleaners because we can hang out the laundry in the garden and dry it in the sun.

Envy, I understand.

0 ( +2 / -2 )

Utinokati is a free website that shows you market values and price trends

for Japanese apartments, homes, and land, all at a glance.

https://utinokati.com/en/

1 ( +1 / -0 )

Interesting report. Real estate in Japan is way more complex than simple "worthless in 25 years" type generalizations. Clay makes good points about people's motivations here. Good location and a better deal than renting will be enough appeal for many.

2 ( +2 / -0 )

I would buy but then I’d be stuck in Tokyo.

If you only have one place, presumably you could rent it out for more than the mortgage.

The cheapest mortgages are for owner-occupiers, but presumably you'd get away with renting the place out if you were doing it on only one property and claimed it was "temporary" while away with work, family business etc. I bet some people are doing it.

1 ( +1 / -0 )

Most stories would define “new condo price”. New construction?

0 ( +0 / -0 )

Too bad the quality of the new construction mostly sub-par. Japan's building efficiency standards were last updated in the 1980s and regulators have been too afraid of developers to update them. Yet another area where Japan is trailing the rest of the developed world...

Would really be great to see action on this so people could have more confidence in their purchase.

1 ( +3 / -2 )

It is good Japan retained the idea after the bubble that property value falls when it ages.

Just look at those countries with housing as an investment asset and tell those locals living there that it is a good thing.

0 ( +0 / -0 )

Where I live you can buy a new 4LDK house with a garden and parking for ¥30-¥40 million.

The market is based on supply and demand. So those low prices mean very few people want to live where you live.

2 ( +2 / -0 )

Couple more important 'free' thoughts on mansions and life....

1) If you have kids, you've got built in safety, school and other friends, babysitters, etc.

2) If a gaijin you've got built in status/trust/credibility/respect from EVERYONE

3) Regarding two points above, neighbors trust me with their kids and vice-versa, it'd be a cold day in hell before that would happen if I was a renter somewhere

4) No asset's more important than the little ones, it's not even close no matter how rich, who are you going to trust when you're unable to get home? We've got old ladies always making sure kids are safe all the time it seems, that's serious constant risk mgmt. benefit

5) Age of Covid-19, trust/relationships/community/safety that much more important

6) Never heard ONE annoying sound/disturbance in +13 years as walls so thick, quality matters, lots of new construction's cutting corners on soundproofing/low quality

7) Your best investment's anything contributing to your true legacy(s) objectives and health; smart housing decisions just makes it easier/less stressful/safer etc. and asset class of real estate in Japan's not good one financially, especially land, but combined with many nonfinancial benefits I've tried to outline, makes total sense even for sharpest investors

8) Towers (anything 13+ floors) not as good for most given reliance on elevators/less social/earthquakes, avoid ground floor, stairs good for exercise but elevators a must, also wheelchair friendly, likely buildings from 4-8 floors best/like me naturally, need to make sure there's no risk of 'losing' your view due to new developments etc. Looking out my window now, new building on other side of train tracks, facing north/not as good, just built directly in front of another high-end Mitsubishi building, +50 units are now forever dark, not a surprise to me, seemed obvious, so don't make any purchase moves unless you REALLY think it thru, besides having no natural sunlight, values instantly dropped a lot, harder to rent etc.

9) Slightly used best because track record, easier to identify risks, no deadline pressure, can find buyers not consumed with greed like developers, etc. Best scenario is younger couple with young kids or wanting to start a family, find seller who wants to 'help/empathetic', you have to have good 'pitch' to gain approval in desirable buildings, especially if gaijin!

10) Numbers matter, don't get emotional, save that for matters like precious little ones!

Hope it helps, only need to make ONE good decision, so don't blow it, better to wait if unsure, everyone will seek to create FALSE pressure, they're all much more experienced given it's their business, market, etc. You're at a built-in disadvantage and real estate players in Japan are seriously greedy like everywhere but unusually intense and transactional here and I've seen lots of markets in my day

Finally, I'd also avoid any location with lots of gajins, HUGE red flag, ONLY gaijin in my ENTIRE building, that's no accident, our mansion fees just happen to be very reasonable, that's no accident either...so manage all your risks or you can be SURE someone else will, as everything and I mean EVERYTHING's calculated here, especially in zero sum real estate!

2 ( +5 / -3 )

JeffLee

   Where I live you can buy a new 4LDK house with a garden and parking for ¥30-¥40 million.

> The market is based on supply and demand. So those low prices mean very few people want to live where you live.

Not true. Many new houses are being constructed. We have a very healthy and steady population from very young to old. New people moving in. A safe place for children.

There are not many vacant properties and even less of abandoned types falling down.

Tokyo is the most expensive for property prices.

https://utinokati.com/en/

-2 ( +1 / -3 )

The average price of a home in Toronto, Canada is 1.2 million dollars

1 ( +1 / -0 )

The average price of a home in Toronto, Canada is 1.2 million dollars

In Sydney it's 1.5 million Australian dollars. It's certainly a wealth builder for many in countries like Australia, Canada and the US. I don't know how it works in Japan and whether it's a wealth builder for Japanese to the extent you see for Americans, Canadians and Australians.

1 ( +1 / -0 )

I would say that a high rise condo in Tokyo is a death trap during an earthquake unless it’s very new. Even with earthquake insurance, I would bet that the insurers would go belly up if (not when) the big one hits Kanto.

1 ( +1 / -0 )

Last 'free' community service thoughts on this subject, hate to see people get burned!

Regarding financing and rising rates etc;

1) What matters are real rates, cost of loan's interest less inflation, WORST scenario's deflation, then it's cost loan's interest PLUS deflation

2) Real estate's good inflation hedge/protection historically, so if you believe world's moving away from zero rates/free money like most now do, there's less deflation fear, BOJ's absolutely panicked about deflation, will use this inflation to shift their policy etc.

3) Deflationary environment also puts downward pressure on asset prices obviously, so world with rising rates and inflation should be net positive for good real estate asset classes in Japan like mansions, you'll be at least somewhat inflation 'hedged'. Surprised my mansion after 13 years has over 50% appreciation, was always hoping it would just hold its value but yen's now in toilet. 'Thesis' was never appreciation, rather cash flow based ROI plus intangibles/quality of life I've already detailed

4) Real estate markets that have really performed in recent generations experienced serious wealth accumulation due to largely technology, that's not happening here anytime soon folks, so if you're 'banking' on appreciation, you're making a bad bet, you should consider an Austin Texas or other tech hubs that have huge money inflows, job and biz creation, industry champions, great tax structure, large venture community, and obviously great demographics as a result, Japan's hardly falls into this category! Brisbane, Dubai, Singapore, etc. Just get yourself a good REIT if you want that exposure, that way you can still enjoy the sushi, safety, onsens, etc. here!

5) Buyers who can tolerate rising payments due to interest rate increases on ARM loans, who know it's mostly not 'real' but rather inflation, go for it, for those more sensitive to rising rates, lock in a fixed rate. Be sure you can refinance anytime without too much pain

6) For some, best bank can be family, many elderly people in Japan starved for income on their ample savings, maybe your family members and you can create win:win, given its family and everyone's 'dying' for grandkids, just make sure it's a proper loan secured by underlying asset/mansion. It's an opportunity to strengthen relations/build trust if done well and you make ALL your monthly payments!!!!!

7) Almost EVERY successful person I deal with in Japan owns mansion now and has exited traditional housing market, naturally most too slow to do so, some stuck given their family's too large, 3 kids kind of limit for mansion life, especially if you have big monsters!

-1 ( +2 / -3 )

I love my comfy place in central Tokyo…; I’m already used to this feeling of being connected to everyone and everything and to Tokyo Metro, probably the best subway in the world…; yes, it can be tiring and it’s expensive but it’s an amazing city.

(But) I don’t dislike the idea of going to the inaka or a smaller city and enjoy the silence, fresh air and the simplicity of it all, but, in the long term… I’m not sure…;

yes, earthquakes can be scary, but Tokyo is extremely safe and well prepared.

Imho, this Tokyo/big city vs inaka/small city debate will never be over… just like everything else in life, there’s pros and cons and it depends on the person and his/her personality, so the best thing to do is to respect each other’s opinions and move on.

-1 ( +0 / -1 )

Western Tokyo, if you walk around nice neighborhoods with large homes, you'll notice;

1) NO FOR SALE SIGNS ANYWHERE

2) Conservatively 20% of homes EMPTY and presumably for sale

3) I walk LOTS, daily for YEARS

4) SAME neighborhoods have HUGE mansion projects under construction everywhere

5) Almost NO truly new single family homes being built, sometimes a tear down and rebuild but in my case it's about 99% mansions comprising truly 'new' units

In fact, going for a walk right now with a little boy who's been napping too long and probably I'll be changing his diaper before heading out. My market research's pretty solid, as we don't exactly talk about the meaning of life at this stage, we talk about the color of that house, car, dog, cat, tree, etc. so I've got plenty of bandwidth to correctly assess vacancy

I love houses too, grew up in far nicer more expensive home than far more than 99% out there, but it's about 'market' reality, keep in mind Japan has some crazy number of empty 'zombie' homes, it's over 10% of housing stock and growing because NOBODY wants land, even in NICE western Tokyo/see above, so don't 'fight' the market!

This is not a debate about country or city, it's about type of housing to select in a country experiencing the greatest demographic non war based collapse in the history of the world

0 ( +3 / -3 )

Many people live in Tokyo but are not always out of choice and more out of necessity. For our lives and work, we don't need to be in any major city so we choose not to live in more expensive places when we didn't have to. I reckon our monthly outgoing would increase 100% for just living in Tokyo. While there are many great points there are also negatives.

I have never lived in an apartment/mansion apartment in all of my 7 decades except for very short terms when between places. I prefer having a large garden and a place to grow vegetables.

A mansion in English has a very different meaning.

1 ( +2 / -1 )

This is perhaps a more important question to ask about a 30-year-old wood-frame house, isn’t it?

I suppose it's possible the land may not actually be worth much in 30 years given that the population is shrinking and will likely drop a lot.

I'm just so used to thinking of property as an investment. I'd rather hold overseas property which will almost certainly rise in value and rent in Japan.

1 ( +2 / -1 )

Lived in cities for 40 years. London, Paris, Rome, Kobe. Now happy to be in the country and seaside.

-1 ( +0 / -1 )

why would anyone in their right mind buy an apartment here?

Good question, dumbest thing anyone could do, seriously.

-1 ( +1 / -2 )

Chinese and other wealthy Asian elites stashed their money in Japan. Expect that Japan will become like the UK soon.

-3 ( +0 / -3 )

Feb. 22  10:12 pm JST

why would anyone in their right mind buy an apartment here?

“ Good question, dumbest thing anyone could do, seriously. “

Not as dumb as refusing to accept and respect other people s choices.

0 ( +0 / -0 )

This is not a debate about country or city, it's about type of housing to select in a country experiencing the greatest demographic non war based collapse in the history of the world

Exactly!

0 ( +1 / -1 )

Trying to make important points without violating 'rules' here, all content below relates to subject matter of mansions/housing/real estate!

I'm no real estate expert but some consider me an investment expert, that being case I'm NOT selling anything. Rather trying to educate people so they can be better informed regarding their important housing decisions here in Japan!

Residential real estate 'market structure' can simplistically be viewed as:

1) Supply = single family (SF)/residential housing stock + multi-unit/apt./mansion (MA) stock

Important Japanese Supply specific considerations include:

a) Allocation of present market supply - % SF vs. MA

b) Amount and breakdown of 'new' SF & MA units being added to Supply, especially recent history, current and forward-looking

c) Amount and breakdown of 'used' SF & MA unit 'listings', those being made available for sale, especially recent history, current/forward-looking

d) Amount and breakdown of 'used' SF & MA unit 'transactions', those units successfully sold, especially recent history, current/forward-looking

e) Pricing, especially year over year for 'comparable' properties for b-d above

Everyone can do their own research, every market's unique even within neighborhoods but following Japan Macro residential housing Supply conclusions can be safely made;

1) Inventory of SF units has been steadily growing this ENTIRE century, officially some +10M 'zombie'/empty homes. I've detailed large steady increase in western Tokyo based on my grass roots research/daily walks in recent years

2) SF units remain dominant as % of total Japan housing stock

3) MA/multi family gained market share % of Japan housing stock ENTIRE century, not because population's increasing but because SF homes are decreasing and MA are increasing. FYI, population peaked in late 2007/early 2008

4) MA/multi family outperformed SF on a price basis ENTIRE century

WHY have MA/multi unit outperformed SF on EVERY basis above for this entire CENTURY? Greater market share, better price action, more new construction, etc.? There must be a basis, so let's examine some possible reasons below!

Every market's logical, especially residential real estate, as ENTIRE JAPANESE POPULATION participates in this market EVERY day...we all have to sleep somewhere!!!

Japan's residential real estate's demand 'market structure' simplistically viewed as follows;

1) Demand = Population living in single family (SF)/residential housing stock + Population living in multi-unit/apt./mansion stock

Everyone can do their own research, every market's unique even within neighborhoods but following Japan Macro residential housing Demand conclusions can be safely made;

1) Population's Shrinking 2) Population's Aging 3) Family Size's Shrinking 4) Marriages Decreasing 5) Non Japanese % of Population hasn't changed much 6) Fewer kids born

Given these Japan 'demand'/population characteristics, easy understand why more people now 'demand' Mansions. Term used in real estate's 'down-sizing', older smaller families and individuals tend to simplify/reduce cost/maintenance/etc.

It's also clear market's over-supplied with single family residential homes, demand's falling while supply available for sale's increasing. This my friends is mother of all 'deflation', these housing prices will have to really drop to be absorbed and keep in mind residential real estate's largest asset class in Japan and basically any market anywhere.

Problem for Japan's SF market's nobody believes that demand will increase anytime soon because it's all conditioned upon demographics, requiring a greater population etc. So why would any logical person, like in Japan, when purchasing housing, choose to buy land? You'll have to borrow more and there's no basis to believe demand will increase, so you're financing a likely terrible investment. Just ask anyone who's purchased a single family here in the last 30+ years, you'll be hard pressed to find someone happy from a financial standpoint. However, they may still love their home!

But everyone requires housing/roof over their head and THIS is why MANSIONS are doing so well. In fact, the market could absorb a LOT more MA EXCEPT for SF supply overhang/zombie situation.

Finally, any discussion of JAPANESE real estate, mansions and buyers/population MUST take into account present situation, specifically the influence of Covid-19. Covid-19's accelerating 'demand destruction' for housing because it's killing people both directly and indirectly/co-morbitity factor

Please do your own research but anyone can find world class medical journals and societies that have extensively researched ongoing LARGE increases in excess deaths and severe disease occurring everywhere, including in Japan. This will of course have a huge ongoing impact on Japan's housing market demand/population structure. The Lancet out of the UK's an excellent journal but take your pick.

Population and therefore demand for housing's rapidly decreasing due to Covid-19 vs. actuarial projections prior to 2020. Such SECURLAR change will favor Mansions 'relative' to SF units in Japan especially. Most actuaries believe global population will now peak likely in 2023 or within very few years, not 2050s, 60's, 70's or later everyone modeled prior to Covid-19, Japan's population/demand for housing's not immune to Covid-19, one must recognize that about 90% of Japan's official/PCR total Covid-19 infections to date occurred in JUST 2022

Hope fine folks monitoring content do not consider above OFF subject, my 3rd attempt, as population demographics equals basis for DEMAND in housing in JAPAN/EVERWHERE, I've made a conscience effort to use the word Mansion/MA, housing, real estate, single family home, etc. in every paragraph!

This is an important subject, simply trying to help better inform people so they can make better decisions in order to ENHANCE their HOUSING self-interest in JAPAN!!!

-1 ( +0 / -1 )

Plus, preference for Mansions/MA in Japan relative to Single Family (SF) residence also increasing because they're far easier to rent/turn into an income property

Therefore, MA buyers have greater flexibility regarding their geographic location, not forced sell and incur expensive transaction/broker costs should they need to move for work etc.

Finally, given present residential market situation, MA FAR easier to sell relative to SF, listing time needed etc.

SF markets in death spiral due to Zombie/over-supply of SF housing, again pushing buyers to demand MA

-1 ( +0 / -1 )

For those interested in investing, not renting, in Japan's residential housing you must consider both financial AND non-financial considerations which I've detailed above. For most, Mansion market will be FAR better choice than Single Family housing and the land purchase component required.

Everyone NEEDS housing, so question's what are benefits of such an investment on risk adjusted basis, including investment opportunity costs you may desire. If one wants to define their exact real estate exposure, one can easily buy REIT shares. Main point's #1 benefit of housing investment are NON FINANCIAL/INTANGIBLE, especially MANSIONS in JAPAN

One should require cash flow ROI of 5% minimum for any Mansion purchase. Given world's demographic problems, tech/other deflationary forces, climate change, etc., hard to 'bank' on any 'REAL' real estate appreciation anywhere, ESPECIALLY elderly Japan, world's oldest country!

The BOJ and actuaries supporting them, OPTIMISTIC forecast for Japan's population of 86M in 2060. Keep in mind NO BANK in Japan provides mortgages on vacation homes, reality's they're scared, plus Covid 19's not exactly re-assuring bankers regarding population/demand for housing. Actuaries I know think 2060 forecast of 86M wildly optimistic given pandemic's on-going and forward-looking health risk 'legacy' and damage to new household formation etc.

Unwinding/deflating of Single Family residential housing supply bubble in Japan will be painful, deflationary and decades long as excess inventory's unwanted, the ultimate risky trying to catch a falling knife, ONLY solution's massive influx of foreign buyers, none of whom speak Japanese....

Hope it all helps, that's the intention, public service and good luck!!!

0 ( +0 / -0 )

Long posts are difficult to read.

1 ( +1 / -0 )

I was involved with the housing co-op movement for 25 years which can provide cheaper more affordable accommodations built to higher standards. I am a big supporter of housing co-ops and housing associations and also worker co-ops.

0 ( +0 / -0 )

Making SMART decision's - DIFFICULT/Requires Due Diligence/Time/Reading

If you make GOOD Mansion purchase decision, it's a REAL community as everyone's invested TOGETHER

Believe non financial returns to be PRIMARY reason to purchase Mansion and NOT Single Family Residence

0 ( +0 / -0 )

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