Is buying a house in Japan a good financial investment?

Not a good financial investment- but a necessity when you have a wife and 2 kids.

A good financial investment? Is buying lunch a good financial investment? You can save money by going hungry.

The value of the house or apartment in Japan is unlikely to go up but paying rent for ever and never owning your home isn't great either. The argument for investing the money instead of buying a property has some merit, but lacks stability in my opinion.

Mr Kipling, you said you own properties for rental so it works for you.

Depends where it is and when you bought it.

For physically most of the country, no in terms of appreciation or acting as a store of wealth. For hotspots, including Tokyo and central Kyoto, yes with good timing.

We bought 15 years ago and it has worked out great. Fifty odd payments to go and we'll have a lovely house mortgage and rent free.

If you rent you have nothing to show for all the money you spend. If you buy, at the end of the mortgage you own a house

There are too many factors determining whether buying a house makes financial sense to an individual to give a generalized Yes-No answer to that question.

If you are going to live in the same place long term then yes it probably is a good investment. House prices here are generally quite low, interest rates on home loans are low, and there are tax incentives as well. All these combined generally make owning a home cheaper than renting one. Plus owning a home is generally more fun than renting one since its yours and you can more or less do whatever you want with it, which is worth something.

But that only makes sense to those who intend on living in the same place long term. If you think your job or family will require you to move at some point in the mid term future then buying a home loses all its financial advantages. The value of the home will inevitably go down after you buy it, so if you have to sell it 10 years down the road you will take a big hit, plus the various transactional costs involved.

And if you are thinking about it as an "investment" not in terms of investing in your living space but rather more like a speculative investment then the answer is a resounding "NO".

Financially? Low to no

Psychologically or emotionally? Definitely

S

The question is too simple to answer. The term "investment" needs to be defined. Are we talking a specific target rate of return or an X number of years? "Good" compared to other investments? Many people, especially in the US seem to think that a "home" is an investment. It is not, it is first and foremost a place to live, without paying rent. If the value increases over time giving a good rate of return it should be considered gravy. Buying a home (house, condo whatever) to live in is not an "investment" . Buying real estate to hold or rent out certainly is an investment.

The economics of it and Japans mindset of preowned homes makes me think no. There’s plenty of land despite what is said. There might be old abandoned structures there but it’s there.

For personal reasons, yes. Having a place to really call home, your home, is special no matter where it is.

Yes when the location is great and the price low. Like in Japan now.

@wallace - Mr.Kipling quite clearly stated that in his answer.

I have been mortgage-free for 7 years. Love it.

Wallace....

Mr Kipling, you said you own properties for rental so it works for you.

My rental properties are in the UK. (I'm probably the only UK landlord NOT to have increased the rent this year. See, I can be nice...) The UK is a very different market to Japan. The question was about buying property in Japan. My house and land in Japan is worth about the same as I paid for it. But the UK property has massively increased in value. Fine if I just want to sell it but no real gain if I want to buy another house.

Living in a nice house that is yours is difficult to put a value on.

Case by case. If you’re planning on moving around job-wise, then buying real estate may be an unnecessary burden. On the other hand, if you’re well situated job-wise, then investing in real estate and a home might get be a wise move. Stay away from condos as they will tend to depreciate over time. And when buying land, remember: Location, location, location!

When renting, all your money goes into someone else's equity. But, when you buy a house(I don't recommend condos), then some of each payment to the bank is to your own equity.

So, in the long term, buying a house can be better if you plan to live in it (or later rent it out, with risks!) for a long time.

I live on Noto Hanto and many homes here are very large over 100 years old and very well built. My home is a 13 LDK built at the end of the Meiji era. It was reformed several times over the years and I bought it for 200 万 years ago. It didnt need much reforms but my wife and I refomed it put in a modern bathroom, kitchen, new entrence way and removed one of the tatami rooms and put in flooring. Great home so for us it was a great investment. With the reforms the value of the home also has risen, we love it and would never sell it.

For investment buying and reforming apartments in the Kansai region to rent is a good investment. Buying an expensive home built between 1955 and today just to live is not a good investment.

The house and/ or the land? Houses can be cheap, and are often knocked down after 25-30 years, but the land may retain its value, even sometimes increase.

Twenty years ago you could get a house near where I live in Tokyo for around 2,000 man, now they cost around 5,000 man, they same as they were during the bubble, so I would say yes, a good investment

In fact it's the worst I have ever experienced. NEVER BUY A HOUSE IN JAPAN .

Necessary, but not as investment!!! The price only goes down!!! Not like in Europe where value of a house would normally increase.

Well, I guess it depends on what we define as an investment. Paying off the loan, and living in it rent-free, mortgage-free is great. Compared to paying rent until the day you die. and struggling on a rather poor Japanese pension. I also guess, depending on the location, the land or house can be given to the next-gen. But i think its probably better to look on this investment as an investment in yourself rather than as a appreciating asset. At the end of the day, if the prices go up, then everyone else goes up to, and people in Japan don't buy and sell like they do in the USA. And I'm not sure it's even possible to DOWNSIZE in Japan. Unless we downsize to a tent in the park. or a dilapidated house empty house. Homes are for families, to live in...Not just to make money.

Twenty years ago you could get a house near where I live in Tokyo for around 2,000 man, now they cost around 5,000 man, they same as they were during the bubble, so I would say yes, a good investment

Yes, even second hand "mansion" apartments in Tokyo have gone up in the past twenty years. The value of a mansion lies in the building, not in the tiny share of the land you get by buying one. So you cannot just say the price of that type of real estate has gone up "because of the land".

In the above example, anyone buying twenty years ago for 2000 man will have been universally told "you will lose money". The opposite has clearly happened, and downvoting the comment will not change it.

I've paid well over 25 milion in rent in Japan. Now, if I had bought a place...

If Banks in Japan would fully lend all home loans regardless of the age of the house then it might become a "good investment" but sadly after 30 years banks consider the structure of the home to be worthless.

Not a good financial investment, unless you plan to pass the house to your kids. It's not like the US, where real estate usually appreciates; more like buying a car.

The house and/ or the land? Houses can be cheap, and are often knocked down after 25-30 years, but the land may retain its value, even sometimes increase.

Try telling that to foreigners who come in to buy cheap property to flip and resell.

It is my biggest regret to have built a lovely but worthless house over here. I can see why so many people here can't be bothered to try to maintain the exterior or interior of their houses. Why bother when it is valueless? In my case I do but that is because I am house proud and can't stand the thought of living in a hovel. Of course, after I'm long gone, I imagine my wife won't be bothered. It'll turn into the haunted house on my block.

Probably not as much as in other countries, as property in Japan depreciates so fast. But there is still the land it stands on, which in the current market (depending on the area, of course), is more likely to increase in value.

Just bought a older renovated second one as a second house for a cheap price. Better than renting and loan repayments work out much cheaper. Mine in 5 years. No-Brainer.

Aly Rustom Oct. 2  08:18 am JST

Not a good financial investment- but a necessity when you have a wife and 2 kids.

I also have a wife and two kids and completely agree.

A lot of people will argue that houses in Japan depreciate in value. But if you could choose between paying a mortgage for X years or paying rent on an apartment, which is better? At least after paying off your mortgage, you’ll own something at the end, unlike renting.

As commented, investment in what? Expecting a higher value or a place that is your and fit you stopping to pay rent, renewal fees etc.

Paid millions in rental forpoor quality Apartment with horrible neighbors, now I am glad with my house as well as family.

I thought about buying every few years.in Tokyo then I see the prices…

The house won't be worth much but the land will be, especially in inner Tokyo. That and having your own walls makes it a no brainer.

Better pay mortgage that is usually less than wasting money on rent, where you cannot do anything with the place...

Better pay mortgage that is usually less than wasting money on rent, where you cannot do anything with the place..

On the other hand, Japanese housing loans are non-recourse so even if you cannot pay and return the property they will still come after you. If you decide you want to move, go home, divorce, etc. renting is just so much easier to deal with.

If you are living permanently in Japan to own your home is a good investment, over many years financially seen surely better than paying rent.

If you don't think then no!

But if you know how to use a simple calculator then yes.

Tokyo for example.

Rent for a 100 square metre home or apartments is going to be a minimum of ¥120,000 to ¥170,000 a month.

Let's say ¥150,000

That is ¥65 million over 35 years and you have ave zero to show for it!

A house of that size with land in the same location will be a mortgage of around the same or less payment plus for 10 years you get a tax deduction, and after 35 years even if the house is old the land still has a substantial value.

Do in the case of renting you get nothing back your children get nothing to inherit.

If you own you all least have something in the end and if you sell you get something back.

A house is a depreciating or static thing in Japan. The land is the appreciating thing you're buying.

Redemption

Oct. 5 11:42 am JST

I thought about buying every few years.in Tokyo then I see the prices…

Now looking at house size not land.

Yes if you are look for a large piece of land there is no comparing to North America but very similar to most major cities in Europe in size and price.

But a nice 120 sq metre single family house in walking distance of a station within the 23 wards of Tokyo can be found for ¥ 50 million a similar size house in a similar type location in NY, Montreal, Toronto, Vancouver Seattle, London, Paris, Rome Berlin would near impossible.

If the above cities Montreal would be the most affordable and yes the land would be much lager but a 120 sq metre house within walking distance of a metro station will cost at a minimum ¥ 100 million if you could even find it a house of that size in a suburb equivalent to living in Nishi- Tokyo city will cost at least ¥50 million.

Now I am only using Montreal because out of the list of major cities it has to lowest prices for homes.

But again I point to the simple fact that in Tokyo the same amount you are paying in rent over a few decades would have paid off your house.

Ex: a ¥45 million house in an other ward of Tokyo 23 in less than 10 minutes walk from the station the 35 year mortgage including everything (10 year insurance 5 years earthquake insurance) would be roughly ¥120,000 a month. A similar size rental house in the same area will be ¥170,000 to ¥200,000 a month an apartment/condo rental will be ¥150,000 to ¥170,000.

So if you are now paying ¥150,000 to rent a condo you could own a similar size house no renewal fees no worries you may have to move at ¥120,000 mortgage you put aside the ¥30,000 difference a month as a emergency contingency fun you get 10 years of tax deduction based on the mortgage, and you have something you own fully paid off in the end that value.

A house? No. Houses lose value and are basically disposable. After 20 or 30 years, a house has zero value and even technically has negative value because of the expense of tearing it down.

The land underneath the house will hold its value. Whether it will appreciate in value is another question. That depends greatly on where the land is.

Buying a house and land saves on rent, and so you might come out ahead long-term. If you are looking for returns on an investment, however, a house in Japan isn’t going to give you that.

mikeylikesit

Today 03:04 pm JST

A house? No. Houses lose value and are basically disposable. After 20 or 30 years, a house has zero value and even technically has negative value because of the expense of tearing it down.

> The land underneath the house will hold its value. Whether it will appreciate in value is another question. That depends greatly on where the land is.

> Buying a house and land saves on rent, and so you might come out ahead long-term. If you are looking for returns on an investment, however, a house in Japan isn’t going to give you that.

Until I came to Japan the only time I have seen buy a home without the land would be detached condos and even then you have some ownership.

I take the question "buying a house in Japan" as meaning with land.

Sure if you are looking as an investment it isn't a great option.

But then will whatever you invest in make up the difference of losing all the money you spent on rent.

A mortgage of 30 years at ¥120,000 a month in Tokyo will still leave you with a minimum the land value once paid off.

But that same rent leaves you with nothing.

Will any investment make up for the 100% loss the rent has cost you over 30 years?

Japanese homes have been a depreciating asset (in most instances) for 30 years since the bubble burst...

But Japan has had no inflation in that time either.

Knock knock. It's inflation time.

The 30 years without a payrise or the price of beer changing is over.

The yen is cheap.

I'm no economist but it's hard to see prices not rising under these circumstances, except in the rural areas suffering from the population decline.

There are going to be some real ghost towns out there.

Be like Bill Gates. He said the only property worth investing in is FARM LAND.

Japan is the best country in the world to own a house. Why? Because of negative rates for mortgage which cannot be found almost anywhere else. Paying for mortgage is way cheaper than paying rent. Is no brainer. The conversation changes though if you think buying an apartment. The apartment here are the same prices as houses, have paper thin walls, no insulation, and to top that you have to pay ridiculously high maintanance fees, parking, cleaning etc, which can add almost another mortgage rate in top. So definetly no worth it.