A news story that tends to make the rounds every so often is about how Japan has so many vacant homes that it is giving them away for free to anyone that will take them. Sounds too good to be true, right? Obviously. That said, there is a kernel of truth to extremely affordable housing in Japan that has a number of explanations.
First, an example of "too good to be true." The "free" houses you may hear about whenever there is a slow news cycle are pretty much what you would expect in terms of quality. Many of them are in dying towns or communities with little in the way of job prospects. They can be in rough shape, ranging from simply being old structures...
to looking like a leftover set piece from a Scooby-Doo ghost town.
These buildings are 'akiya' (空き家) [ah-key-ya], which simply means 'vacant house'. Akiya have become an increasing problem for Japan, which is why you hear about them being either sold for a song or outright given away for free. Typically what happens is that young people will have an elderly family member that passes away and leaves them or the family their house. Because the house may be in an area that is less desirable to move to than their current location, the family may wind up having no use for it. Another reason may be that the homeowner is forced to move away for some reason, either medical, professional, or economical, and thus leave behind their empty house.
Now, the very first things that comes to mind for many of you is "Why don't they sell it?", "Why is that an increasing problem?", and "Why would you ever have to try and give away a house for literally nothing?"
All of those questions can be generally answered by one problem that Japan has been facing for some time: population. Like many places in the world, Japan is dealing with a demographic crunch. Their population has been skewing steadily older for a long time. The median age in Japan is currently 50 years old. This is higher than even Newfoundland and Labrador (45.5 years old). Birthrates are also way down, with the fertility rate currently sitting at 1.20 as of 2023 (about on par with Newfoundland and Labrador's). For those who are unaware, a fertility rate of roughly 2.1 is needed to maintain a stable population.
So what does all that mean in stark terms?
From National Institute of Population and Social Security Research Japan.
Basically, Japan is currently going through a net loss of about 800,000 people a year. It's current population is about 123 million. In 35 years, current projections put Japan's population at 93 million. It's not only birthrate that is causing this problem. The only country where Japanese is the main language... is Japan. It is also an island country. These are major barriers to immigration, with only 3.16 million foreigners living in Japan permanently (less than 3% of the population).
All of that is a very long-winded way of saying that Japan has far more housing than it needs, with the supply still rapidly growing.
Now, even with that in mind, some of you may still be of the opinion that giving away a house for free is extreme. There may be an abundance of supply, but there is also still some demand. That may be true, but who would want to buy the (likely) worthless house that you are offering?
Japan uses a 'scrap-and-build' approach to housing. Basically, houses are typically good for about 30 years, at which point you tear it down and build anew. This is done for a few reasons, such as frequently updated building codes, advances in design and materials that resist disasters (especially earthquakes), and the fact that houses in Japan are not treated as assets. In Japan, the land itself is what builds value. Houses suffer depreciation, the same way a vehicle would. By the time the house hits 20-30 years, it has pretty much depreciated to worthlessness. So no matter how good the house might be, if it is sitting on a bad piece of land then you likely won't get anyone interested in buying it. In Japan, a bad piece of land is basically anything outside of a city, which is where the young people are flocking to for work, much like in every other developed country right now.
That said, there are still good deals to be found on account of oversupply and Japanese attitude towards housing (it being more of a disposable thing rather than a long-term investment).
Would I buy this beauty, built around 1990, extensively renovated in 2022, sitting on about 4000sqft of land that is 5 minutes from a train station and in a city of about 75,000 in Japan's fifth-largest prefecture?
Yes. Yes I would.
Oh, what's that? Japanese houses tend not to be as well insulated as in the West, so they can be a little drafty in the winter? Oh, well I guess that could be something of a dealbreaker...
Give it to me now and find a way to shrink it so it fits in my luggage.
