Many people, particularly expats living and working in Japan, have gone through the pros and cons of renting or owning a property. Most of them believe that renting a house would help them save more money – that’s because most of them are blinded by the fact that seeing the figures themselves means they’re able to keep something extra. Add the fact that they don’t want to risk everything in a country that is considered to have a high standard of living.
A typical conversation between two colleagues involves, aside from snippets about their personal lives, the status of their business and the changing economy. Add several complaints on budget and paying the rent, it’s sure to be a lengthy conversation. One businessman shares his encounter with a former colleague, who, after all these years of working and doing business in Japan, still pays his rent and doesn’t have his own property. Through his curiosity, concern and knowledge, this person was able to help his colleague realize the advantages of owning a property.
After treading lightly on knowing his colleague’s cash reserves during their last conversation, he found details regarding the place he’s living. He found out that he lives in a 2DK which he estimated would be between 40 and 50m2. His colleague has 15 million yen stuck in the bank earning no interest and lives about 12 minutes from the closest station and paying 105,000 yen per month on rent alone.
Having all that information, he found out, using this online tool the following information: since November 2011 in Tokyo's 23 wards alone, 43 apartments have been sold for less than 1.3 million yen, which were between 40 and 5m2 and the average selling price has been 8.9 million yen. These apartments had an average floor area of 46m2 and were 9 minutes away from a station. He also found out that if his rent is 105,000 yen a month allowing 12% expenses, his colleague would be able to pay himself back in over 10.9 years of paying rent and have an asset at the end of it, rent out if he decides to leave. But spending this amount on rent alone, he convinces his colleague that there’s no reason not to get decisive and buy a property instead.
To rent or to own? That’s actually not the question for some. Having discussed all these, however, his colleague pointed out that it still boils down to whether it’s the best time to buy or not, especially in Japan. Earthquake and the effects of the March 2011 disaster is one of the factors that affected the decision of property buyers to carry on with their plans to make purchases.
Let’s face it: renting is just dead money – at least, for a tenant. While that may be okay if you are a transient international, what happens if you end up staying where you were once merely visiting? A number of foreign residents showed interest in buying property in Japan, because they have ended up marrying here and want to settle down, others because they see it as just a plain good investment. And while you may have thought the overly active earth beneath you is reason enough not to buy in this earthquake-prone land, consider this: Japan has one of the lowest housing interest rates in the world, and the market has most definitely bottomed out. With a little extra money in the bank, and a perfectly good reason to stay here for another 5 or 6 years, people could help themselves with a little bit of research.© Japan Today