While Japan has much to offer on the employment front, the property market has been shunned by foreign nationals and investors because of the high cost of good quality property. There is also the ever-present risk of earthquakes. While major earthquakes are world breaking news, there are a number of smaller quakes which go relatively unreported outside of the country. The Japanese property market still reeling from the economic bubble burst between 1986 and 1990. Just when the Japanese economy was recovering from this setback, the global financial crisis has again put a damper on the full recovery of the Japanese juggernaut.
As some of the better quality properties in areas such as Tokyo can cost upwards of $450,000 this, and the fact there are foreign ownership restrictions, has resulted in a limited foreign national property market until now. The recent boom in property prices and a relaxation of foreign ownership regulations (as well as an increased likelihood of obtaining a local mortgage) has started to attract foreign investors and Expats living in Japan . An expat gave their two cents on finding a place in Japan, in a post at the Japan Expat Forum last January 9, 2009:
Other than that, I’m not sure what to suggest. Every district has it’s plus points. If you’re here visiting, you’ll be on the trains a lot so finding a place near a station could be a big help. Most of the major stations have escalators and/or elevators these days so the pram shouldn’t be a huge issue (by “major” I’m talking Shinjuku, Ikebukoro, Tokyo, Shinagawa, etc). Smaller, out of the way, stations, especially on the subway, may not have pram-friendly facilities but there’s no way to list every station you might choose to stay near.
The country has always been one of intrigue to many, swamped in history and a very clear culture which has evolved over thousands of years. Together with neighboring China, Japan has an economy that can stand head to head with any in the Western world. The political environment can however be a little difficult to understand, with the authorities often making snap-shot decisions in the event of problems or concerns with the country – this uncertainty has affected both the economy and property markets over the years.
Property Market Performance in Japan
The Japanese property market is very closely connected to the Stock Market that saw a massive fall in the 1980s. Just before the falls in the stock market, property prices had been bounding ahead with prices just not sustainable in the longer term. When the markets began to fall, investors rushed out of the property market that remained in the doldrums for years afterwards. Over the last couple of years, due partly to the relaxing of foreign ownership restrictions, investors are coming back into the property market. With their experience in the 1990s, the country is making headway towards recovery as the market has shown significant price differences and price performances in both the rural and urban areas of Japan.
As with Thailand and its largest city, Bangkok, Japan has a two-tier property ladder with Tokyo miles ahead of the rest. Tokyo has seen annual rises of 30-40 per cent in land prices, which are in great demand for new property builds. While there are genuine concerns that property prices in general are moving too high too quickly, they are still only at 50% of the levels reached in the 1980s (an example of how far the market had risen!)
Slowly but surely Japanese prime property is being priced out of the range of many foreign nationals, although prices are not as high in some of the less economically active areas of the country. The concern is that immigrants will need to work, and the main work is in and around Tokyo – although Japan has an excellent transport network that many foreign nationals need to check out very soon!
Commonly referred to as the Land of the Rising Sun, Japan has a beauty and culture all of its own. While property prices continue to rise, and Western companies continue to flock to the area, there seems little likelihood of property prices falling back too far. But then again, the real risk of earthquakes is never too far away.
If you are considering moving to Japan, you really need to do your research, and go into the country with your eyes wide open. Renting may turn out to be your only real option.
Property Costs in Japan
Historically foreign nationals had to prove that they had lived in Japan for a certain number of years before they could even be considered for a mortgage. This was in the days when the government was very protective of the property market, but since the massive falls of he 1980s, regulations have loosened a little and the banks are not quite as strict. It has also helped that many of the financial institutes have been removed from government control and are now formulating a commercial policy towards business.
From start to finish the process of buying a property can be over in 4 to 5 weeks, and generally you can expect to pay an additional 8% of the asking price in taxes and charges. The process of transferring property in Japan is quite specific and is very technical thus the need for a property agent is paramount.
The area of mortgages does need further investigation, and it is vital that local experts are appointed to assist with the legal and practical areas of purchasing a property in Japan.