EVERY 20 years in the eastern coastal Japanese city of Ise, the shrine, one of the country’s most venerated, is knocked down and rebuilt. The ritual is believed to refresh spiritual bonds between the people and the gods. Demolishing houses has no such lofty objective. Yet in Japan they have a similarly short life expectancy.
According to Nomura, a brokerage, the value of the average Japanese house depreciates to zero in 22 years. (It is calculated separately from the land, which is more likely to hold its value.) Most are knocked down and rebuilt. Sales of new homes far outstrip those of used ones, which usually change hands in the expectation that they will be demolished and replaced. In America and Europe second-hand houses accounted for 90% of sales and new-builds for 10% in 2017. In Japan the proportions are the other way around.
The reasons for Japanese houses’ rapid loss of value lie partly in tradition. In many countries people buy when they pair off, when they move to a bigger place after they have children or when they downsize on retirement. Japanese people have tended to see out all life’s stages in the same dwelling, a custom they attribute to their history as a farming nation, when they had to stay put. As a result, they never got used to second-hand homes.
The frequency of earthquakes also plays a part. Large tremors tend to be followed by tougher building regulations. Many people want to live in a home built to the most recent standards. History also helped to form habits. During the second world war dozens of cities, including Tokyo, had been flattened by American bombs. The population then was growing fast. Quantity was valued over quality. Big prefab manufacturers, such as Daiwa House, survive to this day, bringing out new models every year that, as with cars, people aspire to upgrade to.
One careless owner
In a vicious cycle, houses are expected to depreciate and are therefore not maintained, so second-hand homes are often dingy and depressing. Japanese people also shun wake-ari bukken, buildings “stigmatised” because, say, a former resident committed suicide there or a cult resides nearby. “In Japan, the words old and charming do not go together,” says Noriko Kagami, an estate agent (who tore down a house she bought herself).
Unsurprisingly, given the speed at which the value of houses falls to nothing, banks are more willing to offer loans for new places. Government policy, long aimed at resolving a housing shortage, further skews housebuyers’ incentives. It is not tax-efficient to improve a house, says Daisuke Fukushima of Nomura, since property taxes are based on value. Someone who buys a new-build must pay 0.4% of its value to register ownership. Registering a change of ownership costs 2%.
Construction and home-fitting companies benefit from this speedy housing cycle. But in the longer term is it wasteful. Chie Nozawa of Toyo University compares it to slash-and-burn farming. “We are not building wealth,” says Yasuhiko Nakajo, who leads the property department at Meikai University.
When the number of mouths to feed is growing, slash-and-burn at least makes short-term sense. But Japan’s throwaway housing culture, shaped by a once-urgent need to house growing numbers, makes no sense now that the population is shrinking. The country currently has an estimated 10m abandoned homes, a number that is expected to rise above 20m by 2033.
That is a problem for entire neighbourhoods: a derelict lot drags down the value of nearby houses. It also complicates the transfer of wealth from the big post-war generation. A house that is worth nothing cannot be sold to pay for an assisted-living apartment or a place in a nursing home, or handed on as an inheritance.
The government has, belatedly, started to rethink its policies. It set itself the target of doubling the number of used-housing sales in 2020 compared with ten years earlier, and is strengthening a home-surveying system introduced in 2013. From next month estate agents will have to give prospective buyers more information, including disclosing the results of any inspection. Much still remains unclear, though, including how long the results of a survey will remain valid, and whether the seller will be liable for defects that were not disclosed during the sale.
The government is also considering reducing the taxes associated with buying a home if it is currently vacant. Some regions are offering incentives to buyers of abandoned homes, including financial aid and lower taxes.
Banks are becoming a little more forthcoming with loans for second-hand housing. Some housing companies are starting to offer renovation and refurbishment services. When Motoazabu Hills, a posh building of rented apartments in central Tokyo, recently changed hands, the new owner decided to gut and redo the interiors rather than knock the whole thing down. AERA, a magazine, recently published a guide to buying property that will retain its value. Among its tips was to buy in an area that is home to lots of women in their 20s and 30s (ie, of childbearing age).
All this is having some success. In the cities a larger share of people now rent than own places, and move more often. “We are entering a stage where people are starting to see a used home as an option,” says Mr Nakajo. In 2017 a record 37,329 second-hand flats were sold in Tokyo, a 31% increase on ten years earlier. Yet until what Mr Nakajo dubs the “20-year-mentality” changes, the preference for shiny and new will remain.