People playing it safe with their money


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My elderly Japanese friend told me that the bursting of "the bubble" was the best thing to happen to Japan.

He abhorred the excessive and wasteful spending that he was seeing back then.

Frugality and modest spending was the way Japanese traditionally used to be since it was a relatively poor country only until recently.

Maybe the Kawabata's have it right.

8 ( +10 / -2 )

If they got the land from her parents, they could have built a nice house for much less than 28 million.

5 ( +10 / -5 )

They are much better off than me even though I make good money as seishain. Certainly my folks ain't giving me no land, and no bank will lend me 28 million yen to build a darn large and nice home I am sure. This is not the face of people playing it safe with their money.

2 ( +5 / -3 )

@Onniyama, if they were smart they would build a house with rental units on the side for additional income. Also, they could get fixed loan from government.

5 ( +5 / -0 )

This couple is a particular example and does not represent the majority of the 30's yr olds. Leaving off of the land sounds wonderful and I hope they are looking at it from a very realistic point of view. Coming from a rural family I know it is not an easy life!

One thing I do not understand in Japan, and I think it is the norm here, is the reason people will not but an used home. There are plenty of really nice second hand homes for a fraction of the price if it was new. My apartment for example was about a third of the original price only 9 years after the building was erected, it is large enough to hold parties with upwards of 60 people including a private terrace. BBQ and kid's pool is always handy but even though I have a very large hydroponic garden it is not a place for the couple mentioned in this article.

But my question is why people chose to be in debt for 30 years instead of buying an used home for much less, sometimes, like in my case if I decided to buy a new unit, I would either have to pay a very large amount of money to have the same comfort or buy a single room unit with one tiny window looking out the main street.

I do agree that people should never take tomorrow for granted. Planing a good and sensible way of purchasing a home is a very hard task that will take a lot of time and lots of day trips around town, but the more you put into researching and planing the less you will stress out to keep the bank away. And the price tag of the home is only one of a series of expenditures it will come with. If you buy a home and have to drag in the old couch or use the old air conditioner it means you should have bought a cheaper house. And lastly... MURPHY is never too far not to show up!

5 ( +5 / -0 )

To write this kind of article is a good idea Mr./Mrs Kageyama but it will be a lot more impacting if you had contacted several families of different social statuses, discussed their point of views and investing habits, and conclude something out of those testimonies. Since the economy is toughening, many of us want to know what is working for other people and learn from them. The Teruyiki family could be an example if the article shows how they carry their spending in more detail and compare it to others. Thank you very much.

0 ( +3 / -3 )

buying a home in Japan. I just dont get it! You are basicly tied to that land, that house payment, and that city for the REST of your life! He says no job is for life anymore. I agree. So many people where I live (in inaka) just built or bought homes. If they loose their job, or want to switch they are SOL because there are so few choices around. It is virtually impossible to sell your home and make cash of it. On the other hand, my friend in Ataltna (USA), just bought a home. I asked him, arent you thinking of chanigng jobs soon. He said, yeah, but will are probably jsut going to sell the house in five year, make some cash off if and move somewhere else.

Buying a house in Japan mean you loose your freedom to move (unless you want to loose lots of cash) Buying a house in the USA is pretty much a sound investment and doesnt mean you loose ANY freedom to move at all.

1 ( +5 / -4 )

In furtherance to my comment above, I think the part-timers featured in this article are comfortable taking a loan that is probably 10-15 times their annual income is because Haruna's parents have loads of cash that they will inherit along wiht the land. Thus, this article should be about Japanese who don't have good jobs but got good folks.

7 ( +9 / -2 )

People are being frugal? No duh. Everyone I know is is living more within their means, and they're not the least bit excited about the upcoming tax hike. Doesn't Abe know you can't tax your way to prosperity? Sure if you're hyper rich it doesn't matter, but most middle to low-income families are already feeling the pinch, and it's only going to get worse.

@Inakarob: another interesting difference? From what I'm told, homes in Japan actually depreciate in value. The way most homes are built in Japan these days they actually wear out quite quickly, and lose a lot of their value in the first ten years (kind of like a car). Not to mention, there isn't a big market for used homes in Japan anyway. This doesn't apply to traditionally built houses (again, I'm told), but it would make me think long and hard before buying a place.

0 ( +1 / -1 )

The only reason they were given the loan was because the title deed is in their name. There is no way in the world any bank would have leant them close to ¥30m on two contract-based incomes. Even getting a credit card would've been difficult.

I've lived in both the city and the countryside of Japan and this couple is a very typical example of a young couple living in the countryside. They are given financial assistance by their respective parents, with the wife's side most likely moving in to help with child-raising / house duties.

This is not the same in the city. Take Tokyo, for example. Most residents of Tokyo are not originally from Tokyo. There is an increasing number of people entering their 30s and even 40s, with no prospect of starting a family, let alone marriage. An alarming number still live with their parents. This means that these individuals have far more disposable income, and thus are large drivers in consumer growth. Bags, shoes, holidays - you name it.

I would've liked a much larger interview base than just one couple from Northern Saitama.

0 ( +1 / -1 )

The people with the real job security are the civil servants - no matter how bad the economy gets you can't lose your job unless you are a total screw-up.

3 ( +3 / -0 )

If you plan to retire in Japan you are going to have to be more than frugal. With the population decreasing, and the amount of revenue being collected to pay for entitlements going down as well, there is going to be little left for the government dole out when young people reach retirement age. Hopefully the Kawabata's entire savings is not made up of yen.

The reason the Kawabata's bought a house instead of renting is that in the long run, buying costs less than living. The payment on a house or apartment is generally 10% or so less than rent, and the mortgage interest (small as it is) is tax deductable, at least for for now. Real estate does depreciate in Japan, but at the end, the land and building have more value than the nothing you have remaining after renting all your life.

As for people in general spending less, that is undoubtedly true. Incomes continue to decrease, and the high cost of doing business in Japan has caused companies to cut back on staff, benefits, and pay. Other companies have simply left, and more are in the process. It has long been said that Asians have a sixth-sense about impending economic troubles, and perhaps we are seeing an example of this now.

1 ( +3 / -2 )

Living carefully is one thing, leaving your money in a Japanese savings account getting 0.0000001% interest is just plain stupid though. Keeping invested in stocks is really a good idea, if you're looking for a place to start google "Kiplinger 25" which is where I always come back to for my investing.

0 ( +3 / -3 )

Japanese don't buy used houses because they are built to last only 10 years. A house is an expense, not an investment. Fifteen-year-old houses are knocked down to make land more attractive.

Japan 101.

0 ( +3 / -3 )

" Japanese don't buy used houses because they are built to last only 10 years."

Absolute nonsense. Most people prefer to buy new houses as a matter of pride and the general disdain of most things "used". My friend just bought a pre-owned 10-y.o. house at a substantial discount for that very reason. All it needed was a little touch-up and minor improvements.

Definitely true that people by-and-large are becoming more frugal, however. Just go to a flea market to see people bargaining.

5 ( +6 / -1 )

They locked in a mortgage at 1.88% interest for 35 years? 1.88% locked in? If I'm not reading incorrectly, this couple just got the deal of the century!

3 ( +3 / -0 )

hey locked in a mortgage at 1.88% interest for 35 years? 1.88% locked in? If I'm not reading incorrectly, this couple just got the deal of the century!

I know, right?! That's exactly what I thought.

3 ( +3 / -0 )

They locked in a mortgage at 1.88% interest for 35 years? 1.88% locked in? If I'm not reading incorrectly, this couple just got the deal of the century!

Repayments of just over 1 million yen a year - not too bad at all.

2 ( +2 / -0 )

My 35 year loan on my 50,000,000 yen mortgage is only 1.12% fixed, and that was with only 5,000,000 down

Banks are very happy to be giving out money right now for home loans

I could have put a lot more on a down payment, but if banks are going to lend at such a low rate, why not just take the loan and use the cash as a safety net or for other real investments

went from a 1LDK to a 4 bedroom 2 car garage house, and I'm only paying 22000yen more a month than when I was renting and paying for a parking spot.

Its stupid not to buy in Japan, especially if you can get loans at such low rates.

5 ( +6 / -1 )

fupayme Oct. 08, 2013 - 05:53AM JST Its stupid not to buy in Japan, especially if you can get loans at such low rates.

Because of the extreme weather, there is much higher maintainance cost and with the decling population, there is much more risk investing real estate in Japan. The average life span of a house in Japan is about 25 to 30 years, which is just one of the reasons why many people don't make these sort of purchases as an investment. Given the high price of land, most people in Tokyo prefer to rent and don't even think about buying a house. If you like the area, talk to some of the people living nearby to get a sense of what the area is like. I doubt the ten year appreciation of the property in Japan will increase that much compare to selected areas in California. Maybe of some Japanese, California real estate investment with reputable property management might be a better choice.

-2 ( +0 / -2 )

Good for them, money doesn't mean anything so I don't see the point of playing it safe instead of risk it and generate more but that just me.

-1 ( +1 / -2 )

fupayme - thats good to hear.

Me and my DH are thinking of buying a home at the moment, was wondering about banks willingless to lend.

An estate agent told me that, from April, they are making "atama kin" (like, deposit or advance downpayment) optional rather than mandatory, in a bid to attract more buyers.

Certainly we are not very rich, maternity leave will absolutely rob your savings,but it does make sense to be buying rather than renting, especially with small kids.

0 ( +0 / -0 )

Mumbai, no bank will ever lend you 10 to 15 times your annual income in Japan. The max is around 8 times. Lower if you are part-time / jieigyou. They might have gotten their parents to co-sign.

1 ( +2 / -1 )

Toyota's CEO, Akio Toyoda, was lamenting the recent trend where young Japanese men don't want to spend money on cars. I think Mr. Toyoda might put this picture in his head. It is Golden Week 1991. Dad has packed Mom and his two children in their new Luxury Toyota Sedan and are planning on a nice leisurely ride from Tokyo up to Nasu. They pull out of their driveway and get on the main road only to have it already bumper to bumper traffic. Not 5 minutes after getting into the car they're stuck in traffic. That must have drove the kids crazy too. They probably only have bad memories of sitting in traffic. They probably told themselves that when they get older they will not be as stupid as their parents. And guess what.... they're not... they're not falling for it.

0 ( +1 / -1 )

" My 35 year loan on my 50,000,000 yen mortgage is only 1.12% fixed, and that was with only 5,000,000 down"

Which bank?

1 ( +1 / -0 )

Sony Bank does a good deal of 2.552% for 20Yrs+ ( Not sure where the 1.12% rate is available, would be curious too as to which bank...

House prices are generally negligible, in comparison to the land cost upon which they're built. Construction Date is supposedly important given the regulation changes towards "Earthquake 'resistance'", though it should be noted that even the Japanese can be corrupt, so be wary of what you buy:

0 ( +0 / -0 )

My 35 year loan on my 50,000,000 yen mortgage is only 1.12% fixed, and that was with only 5,000,000 down

Ours was very similar - 50 million mortgage, we put down a bigger deposit, and 1.17% fixed. That was Risona bank, but others are very similar. It makes no sense to rent long term. Now in California we are doing the same thing. Just got a mortgage approved and looking for somewhere to buy. Would much rather be paying my own mortgage than someone elses.

But everyones circumstances are different and there are many cases when it may well be better to rent.

0 ( +0 / -0 )

Generally it is better to own land. There are times when that is not true as in the go go 1980's of Japan or in the US from 2003-2007. You can see the bubble was going to burst. After 2011 in the US, as interest rates continued to decline with housing prices until 2012, buying a home makes perfectly good sense. In the US now, it is a question if you can get a mortgage after next week and housing will probably take a hit if Washington doesn't do the right thing. As for Japan, the biggest question is the national debt. 250% of GDP does not make me want to invest in Japan. But if you work and live in Japan, you have to live somewhere. Personally, if I were to build something in Japan, I would prefer to be away from the population and off the gird. It's getting too crazy nowadays.

0 ( +0 / -0 )


I didn't buy the house for an investment. Houses aren't investments unless you are collecting rent from them. Houses are all liabilities and are not assets unless they are generating income for you.

I never understood the concept that a house was an appreciating asset. Why does a house go up in value the older it gets? I can understand the LAND might go up based on the location you are living in, but the actual house on top of the land, should never appreciate.

I bought my house cause I was able to build my dream house while paying only like 20000 yen more a month.

Also I don't live in the downtown area, more like the suburbs, since you can't get a decent size house anywhere in a major city downtown (unless you are super rich)

plus, I work from home, and about 30% of my mortgage , utilities, etc are tax deductible.

0 ( +0 / -0 )

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