As anyone who regularly reads this blog knows, we have issues with the Japanese media’s coverage of real estate prices, since they almost exclusively cover Tokyo. For sure, Tokyo properties mean a lot in the scheme of things, but Tokyo real estate is exceptional in the sense that the city still charts growth while the rest of Japan doesn’t; or, at least, not at the exceptional rate that Tokyo does. Consequently, the huge increases in property values that Tokyo is now seeing don’t really represent Japan, something the media neglects to point out. What you get in the mainstream press when it comes to coverage of real estate is skyrocketing condo prices in Tokyo and akiya—vacant properties—everywhere else, and nothing much in between. So we were intrigued by a recent series in the Asahi Shimbun about how the government assesses property values, since they do it all over Japan. Though the articles don’t explain anything about national trends in property values, they imply that one of the reasons for the lopsided coverage mentioned above is that it’s difficult to trust any related statistics released by the government. 

The series was prefaced by an article about an announcement from the municipal government of Chofu, Tokyo, that its assessments for property taxes and so-called city planning taxes were incorrect in 166 cases; specifically, for 88 properties the assessments overestimated their value while for 78 the assessments underestimated their value. The amount of refunds due for the overestimates comes to ¥80.95 million, while the additional imposition of taxes for the underestimated assessments add up to ¥52.61 million.

The mistakes mostly had to do with how land was categorized. For instance, property taxes for land categorized as residential can be reduced by five-sixths if it contains a structure of some kind. Other variables include additional structure, additions to the main structure, and demolition work, all of which would require that the land be reassessed. Apparently, Chofu has yet to determine exactly how they got it wrong, but in any case, according to the law if an assessment is found to be too low, the municipality can demand compensation no more than five years after the original assessment. But if an assessment is too big, then there is no time limit for compensating the property owner.

Obviously, land value assessment is a tricky business that’s open to a lot of subjective factors, so in its Keizai Plus section, Asahi followed up the Chofu item by looking into the broader “mystery” surrounding the land ministry’s public real estate assessments, which are carried out every year for 26,000 locations throughout the country. Two appraisers are assigned to each location, with each one making their own separate assessment, and if there are discrepancies, the ministry mediates. The “correct” valuations are then published on the ministry’s home page. 

It sounds simple enough, but when Asahi checked the original valuations of the paired assessors using AI, they found that in 69 percent of the locations assessed, the two appraisals matched exactly, and in the remaining cases the difference was “within 1 percent.” The location with the highest assessment for residential land is Akasaka in Tokyo, and the assessors’ valuations have matched exactly for the last five years. The prefecture with the highest matching rate was Tokushima at 97 percent. Asahi’s initial reaction was that if the valuations are so predictable, then why do they cost so much? The ministry spends ¥4 billion a year on assessments.

But the question goes deeper. When Asahi asked a private assessor who works for real estate companies they were told that “under normal circumstances” with two assessors valuating the same property, you’ll get a difference of about 10 percent, but “if you follow the ministry manual” for assessment, the valuations will almost always match.

Asahi then acquired the ministry’s 271-page assessment manual, which explains the process. At the end of every June, the land appraisal committee assigns 2,200 appraisers from 167 ministry branches to the work of valuating land, with each appraiser being assigned to 20 locations. Each location is appraised by two people, who are charged with “projecting the value” of the land in question on Jan. 1 of the following year. In October their valuations are sent to the relevant section in the land ministry, where they are discussed three times using past cases as references. The final valuations are then approved and a report is issued.

When Asahi asked the ministry for documents related to  projecting the values of land for the last two years, they were delivered heavily redacted. The ministry explained that there’s a “danger” that publicly releasing such information could “influence subsequent valuations.” When Asahi showed the documents to an outside appraiser who once did appraisal work for the ministry on a contract basis, the outside appraiser said that the two appraisers assigned to valuate the same land always looked at past cases so that their valuations “made sense” when they wrote up the final report, which is why they usually match. A different outside appraiser said that whenever the two valuations did not match, the ministry automatically investigates the difference, since public valuations directly affect property taxes and therefore “shouldn’t be different.” This appraiser said the ministry wanted the reports to reflect a “beautiful system.” 

The land ministry distributes questionnaires to anyone who bought property in a given year in order to understand “the full scope of land transactions,” but usually only 10-20 percent of the questionnaires are returned. Before visiting the land that is to be appraised, the two appraisers refer to data supplied by these questionnaires over the years and use them to come up with valuations. As one outside appraiser describes it, the appraisers base their valuation on their “imagination, which is then adjusted by data.” The difference between the ministry appraisers and industry appraisers is that the latter “wants to reflect the newest transactions as much as possible,” while the ministry appraisers mostly goes by a gut feeling influenced by the ministry itself.

Asahi wondered about the “fairness” of a system whose methodology is a “mere formality,” meaning that it would seem that the valuations are decided beforehand based on past valuations and how the ministry thinks they should change. When asked about this, the ministry simply admitted that there are cases where they ask the appraisers to explain their differences in valuations, “but we don’t demand that they be identical.” 

Real estate people told Asahi that they never refer to the ministry’s valuations when buying and selling properties because they don’t reflect “reality.” 

This gap in perception actually explains a lot about the media’s coverage of both overheated Tokyo real estate prices and the akiya problem. One appraiser told Asahi that the publicly listed values of properties in central Tokyo are only about half their actual value. When public land in the capital is sold, it’s much cheaper because the ministry valuation is used to decide the selling price. Buyers benefit greatly. 

On the other hand, ministry valuations of land in rural areas tend to be higher than their actual value, so in both cases the public assessments are not of much use to real estate companies. As the appraiser sees it, the land ministry’s assessment is an “empty gesture” to come up with circumstances that fit a desired outcome. The purpose of that outcome is to control property taxes, which are set by the central government even if they’re administered by local governments. In other words, keep a lid on property taxes in urban areas where property values are very high, while increase property taxes in rural areas where property values are often worth hardly anything, the idea being that there should be at least some semblance of balance nationwide in terms of how municipalities collect revenue to run their operations. 

This dynamic shouldn’t be surprising and, in a way, makes sense. The real value of a property, in theory, is what the owner can get for it if they sell it. As an extreme example, when it comes to akiya and land that has been vacant for a long time, the value is effectively zero if the owner has tried to sell the property but can’t. However, such valuations negatively affect the bottom lines of municipalities where there are many akiya, so some public value has to be attached to those properties. Whether the owner of such a property actually pays their property tax is a whole other issue. 

Japan has one of the most extensive and sophisticated sewerage systems in the world. As of 2021, slightly more than 80 percent of the population was served by sewerage systems, an impressive statistic considering that less than 10 percent of the population had access to sewerage in 1960. This increase in coverage is just another indication of how quickly and completely Japan rebuilt and improved its infrastructure after World War II. 

A recent article in Asahi Shimbun, however, reported that this trend may be reversing. According to surveys conducted by the Ministry of Land, Infrastructure, Transport and Tourism, one-third of local governments in Japan have cancelled their plans to extend their sewerage systems to new and existing residential development. Instead, household waste will be processed by on-site septic tanks. 

The reason is obvious: Japan’s population is dropping, and the cost of building and maintaining sewerage systems depends greatly on population density. With fewer people living in a given area, the construction of the new sewerage comprising pipes and treatment facilities cannot be paid off in the long run. 

It’s necessary to note that one-third of local governments does not mean one-third of the population. The local governments of large cities represent much larger populations than local governments of smaller cities and rural areas, and it’s mostly in the suburbs and the countryside where these governments are reviewing and cancelling their sewerage construction plans. But what’s perhaps most significant about the Asahi report is its assertion that some local governments will actually backslide on sewerage, meaning that they will replace existing sewerage systems with individual jokaso (septic tanks). 

Urban-style sewerage systems collect household waste water and night soil in one central location and then treat it before releasing the filtered water back into the environment. Septic tanks, including so-called multipurpose tanks that process waste from toilets and sinks/baths separately, use on-site filters and bacteria before releasing the filtered water as runoff into the ground or rivers. Sewerage is obviously more cost-intensive because it requires long stretches of pipepines and the purchase of land where those pipes are buried. Septic tanks, including those shared by communities, are on-site, meaning they are completely contained within the property of the user. 

The Asahi says that in the 1990s many local governments drew up plans for constructing new sewerage systems based on the assumption that the population would continue to increase. Reality quickly put a damper on those plans. The land ministry found that as of 2014 throughout Japan, local governments had fallen short of their stated plans to extend sewerage systems to their communities by 625,000 hectares, meaning that 625,000 hectares of land that were slated to receive sewerage infrastructure by 2014 had not undergone any construction, or about 34 percent. In fact, as of 2019, 158,000 hectares of land that were initially supposed to receive new sewerage systems instead had those systems replaced with septic tanks. And between 2019 and 2025, at least 80,000 hectares of land slated for sewerage were changed to septic tanks. For the record, the prefectures who altered their plans the most were Chiba (29,646 hectares), Ibaraki (26,726), and Fukushima (15,869).

Moreover, some local governments actually stopped using existing sewerage systems due to their inability to keep up with maintenance and improvement costs. There just weren’t enough customers any more. The article uses the example of Sanmu in eastern Chiba Prefecture, which had devised plans for new sewerage in 1995 when it was still designated as a town before consolidating with neighboring municipalities to become a city. In 1995, the population was still on the rise, but by 2015 it was decreasing, so the city revised its plans when it realized that even if it carried out the construction according to plan, it would only cover 7 percent of the city’s total population. Projections said that the city would have to spend ¥1.3 billion over the next 40 years on maintenance of this new construction. There was no way that fees from such a small number of households could pay for it, so the plan was cancelled. Around the same time, 9 other local governments in Chiba cancelled their sewerage construction plans. At present, there are 18 municipalities in the prefecture that still do not have any sewerage systems and obviously never will, regardless of whether they once made plans to construct them. 

It should be noted that the central government subsidizes sewerage construction, and the land ministry itself, having taken note of the population decrease, has encouraged local governments to abandon their sewerage construction plans in favor of septic tanks. This past summer alone, 97 local governments told the ministry that they would change their plans in accordance with the ministry’s request. A representative of the general affairs ministry in charge of public waterworks told the Asahi that this change in policy of the government was mainly implemented in the face of looming infrastructure repairs, which will cost a lot of money in coming years. It would be better if local governments with older sewerage systems that are no longer financially feasible replace them with septic tanks.

One of the reasons we are reporting this news is that we use a multi-purpose septic tank, even though neighborhoods less than half a kilometer from our home are all hooked up to the city sewerage system. When we had our house built in 2013, we learned that the city had no plans to extend sewerage to our area, though we haven’t been able to find out if there were any plans in the past to extend sewerage to our area. 

Still, we wanted to compare the cost per household between sewerage and septic by comparing bills we received when we were renting an apartment in the more urban portion of our city in the past and the bills we receive for maintaining our septic tank now. When we were in the city we (two people) paid a little more than ¥3,000 every two months for both water and sewerage, or about ¥18,000 a year. That was in 2013. Now we pay about ¥15,000 a year for a worker to inspect our septic tank as required by local law every three months. Since we also do not have access to municipal waterworks, we use well water, for which we pay nothing, so in a sense the septic tank is more expensive than sewerage, but that doesn’t take into account initial costs. We had to, of course, sink a septic tank and dig a well, but our local government, at the time, subsidized the cost of the septic tank since infrastructure wasn’t available in our (literal) neck of the woods; and while we had to pay several hundred thousand yen to dig a well, if we had access to the local waterworks we would have had to pay an initial cost of about ¥300,000 just to have it turned on, so to speak. In the end, the difference wasn’t that much, and in the long run, we’re probably paying less, though, we have to admit, well water around here isn’t that great. 

Recent media reports say that housing starts are dropping in Japan, which is understandable but also worrying to those who gauge Japan’s economic health. Japan has long promoted new housing as a prime economic stimulus to the point of downplaying sales of used homes. It’s one of the reasons for the so-called akiya (vacant home) problem, and with the population also dropping, the government can no longer count on high volume sales of new home to fuel the economy, regardless of how attractive they make them. 

It’s also why the central government has done mostly nothing about the akiya problem. As long as new home sales grew, there was no problem, as far as they were concerned. But local governments have always had to contend with empty houses, which are dangerous eyesores that threaten property values. There’s also the problem of absent owners who disappear and stop paying property taxes. Consequently, it’s been local governments that have come up with measures to address the problem.

But now it seems, the central government is getting involved, albeit cautiously. On Oct. 2, Yomiuri Shimbun reported on a new national plan that would have the government subsidizing renovations of houses that may become vacant in order to make them appealing to young families. Next year, the land ministry will launch a model project that will target “homes in cities and surrounding areas” that can be renovated into homes for couples who are raising children. 

The specific type of homeowner for the project will be people who are thinking about moving out of their homes in the future and moving into care facilities. Such actions often lead to vacant properties because the owner does not have an heir or otherwise cannot sell the property. The ministry will interview such owners and, depending on the circumstances, offer the owner subsidies to have the property renovated into a home that would be more suitable for young families or facilities like daycare centers. The subsidy would likely not cover the complete cost of renovation, which the owners would have to carry out themselves. 

Obviously, there is a limited benefit to the plan. The target is only properties in cities and their close suburbs, though the most serious akiya problems are in rural areas and more distant suburbs. Moreover, the subsidy system addresses homes that are not yet vacant but could be, meaning that there is still a possibility that the owner, especially if they live in a major city, can sell their property easily if they try. Presumably, the ministry is thinking of homes that would sell more easily if renovated properly, but, in our own experience, we’ve found that buyers of older properties tend to want to renovate according to their own tastes. When owners or realtors renovate for an assumed general taste it doesn’t necessarily make the property easier to sell. 

The Yomiuri article also leaves out a lot of details that are needed to judge the viability of the project: At what age would the ministry contact homeowners, and what criteria is used to assess their eligibility? How would the ministry persuade the owners to carry out renovations themselves? If the purpose of the project is to check the number of vacant homes in cities and provide properties that will be easier for young families to buy as urban real estate prices go up, it would probably be more effective for the government to just buy real estate itself and rebuild to desired specifications, but that would contradict the tenets of laissez faire capitalism. 

According to a ministry survey, the number of homes in Tokyo and the three surrounding prefectures where the owner is 85 or older is about 340,000. The number is projected to increase to 940,000 by 2033. The increase is similar in the Kinki region: from 210,000 now to 580,000 by 2033. A good portion of these homes were built between the mid-1950s and 1980, meaning they predate quake-proofing technology that is now required. They are beyond renovation. They need to be torn down.

As do many houses that were built after 1981, when quake-proofing standards were first implemented for residential housing. The cost of renovating some structures built even before 2000 may be prohibitive for many of their owners, especially if they are living on fixed incomes. The proposed subsidies, though not finalized yet, will not cover the total cost. 

Demolition may be a more desirable option, especially for the government, since removing a house would create the opportunity for building a new one in its place, which is what the government really wants. (We won’t go into the obvious outcome of generating more waste, which this scheme entails, because that would involve the type of creative thinking the government, with its typically short-term view, seems incapable of) And we found that, in fact, the central government does have a policy for subsidizing the destruction of superannuated residences that the owners cannot or will not maintain. 

Again, the main purpose of this policy is to free up property in cities, where it’s assumed more people want to live. The impetus at present is increased construction costs, so demolition would provide more land that could be developed for affordable housing. According to the Yomiuri, though the policy is still in the discussion stage there is already a budget for it in FY2026 of “several hundred million yen.” The money will come from the land ministry but will be administered by local governments, and will be available annually on a first-come-first-served basis. 

In principle, the subsidy will pay for two-fifths of the cost of demolition, with another two-fifths coming from the local government and the remaining one-fifth covered by the property owner. If the average cost of tearing down a house in a city like Tokyo is ¥2 million, then the central government covers ¥800,000, the Tokyo Metropolitan Government covers another ¥800,000, and the property owner pays ¥400,000. This ratio may change depending on the local government. 

Obviously, in order to qualify for the subsidy there must be a reason for the demolition, and most are for the benefit of the authorities rather than that of the owner: improve community safety and aesthetics, and get rid of structures that are not up-to-date on building codes. Only single-family homes qualify for the subsidy, no apartments or condo complexes. In addition, demolition can be applied to buildings that still contain asbestos, and cinder block walls that are in danger of collapsing.

We looked up some demolition companies on the internet and found a few who are obviously up for the challenge. One even adopted the catch phrase “Akiya Zero,” as if it were providing a public service. As already pointed out, demolition costs in Tokyo start at about ¥2 million, but in the far west portion of Tokyo Prefecture the price can be as low as ¥300,000. In Nagoya, which is considered a major city, the cost can be as low as ¥400,000. Apparently, if you apply for the subsidy, you have to pay the cost of demolition yourself and then receive the subsidy payment later and, of course, there are conditions usually set by the local governments. Some, for instance, insist that they will only subsidize demolition if the land owner plans to rebuild on the land, but in many cases the local government will also partially subsidize the subsequent construction. Anyway, it’s something to think about. 

One of the topics being discussed by candidates for the Liberal Democratic Party presidency is foreigners in Japan, and an aspect of that discussion is foreigners buying property. Some years ago the issue came up with regard to security risks, such as land that was near Self-Defense Forces facilities, but now the net is being thrown wider because foreigners with money are buying up land and condominiums for investment purposes and driving up prices, especially in Tokyo where Japanese families are finding themselves priced out of the housing market.

One area that has been popular among foreigners is Niseko in Hokkaido, which is famous for its ski slopes and excellent powder conditions. According to an article that appeared last June in the Asahi Shimbun, if you go to Niseko, you will see a lot of for-sale signs and billboards in English hawking land. The Asahi reporter who went there in May says he saw many construction workers and dump trucks in the area, where there are subdivisions for vacation homes. However, many of the lots in these subdivisions remain vacant, and appear to have been vacant for some time. He found four that were recently put up for public auction due to foreclosure, but not because the owners failed to keep up their loan payments, but rather because they have not kept up with their property tax payments. 

According to public records, the four plots were originally sold by a Tokyo realtor in 1988, meaning during the bubble period when everyone thought land prices in Japan would continue increasing forever. The realtor has since gone out of business. Two of the plots are in a vacation home subdivision 2 km south of the main ski area. Land registration records indicate that the subdivision was carved out of a tract of forested land in the 1980s. There is obviously still some demand for second houses, because the reporter saw construction taking place on some plots, but the two in question remain empty. One of the plots is 205 square meters and the market price is ¥3.444 million. 

Two other vacant plots originally sold by the Tokyo realtor are located in a mostly forested subdivision 3 km north of the ski area. Though the plots are on prepared ground, they are still empty, and are cheaper than the plots in the south subdivision, ¥492,000 for 385 square meters. 

Originally, the plots were bought by someone who lived in Sapporo between 1979 and 1983 as investments, but after the bubble ended there were few buyers, which is why development stalled and many plots remained vacant. However, starting about 20 years ago, the ski area became popular among foreigners, in particular Australians. But the reporter also found several plots that were registered to addresses in China, and still more registered to addresses in local towns but with names that were in katakana, thus indicating the owners weren’t Japanese. 

A bulletin board in front of the town hall lists notifications of properties with unpaid property tax bills that includes the addresses of the delinquent owners, most of which live overseas. In almost all the cases, the reporter learned, notices of delinquent payments were sent to the addresses overseas and later returned because the notice was undeliverable for some reason. The number of unreachable owners exceeds 100. 

A representative of the town’s tax division told the reporter that after a certain period of time, the town can foreclose on the land and put it up for sale. Last year, they did that for 11 plots. And it isn’t just individual plots earmarked for vacation homes. In 2022, the town foreclosed on a construction company that owned a hotel near the ski area due to unpaid property tax bills. The company is based in Tokyo, but the president’s name is, again, in katakana and the company is registered in the Cayman Islands, a famous tax haven. 

In August, the same reporter, Arata Matsuura, wrote a more detailed article about his trip to Niseko for the business magazine Toyo Keizai. He starts off saying that land values in the area have increased by almost 10 percent over last year, fueled by interest from foreign buyers. He goes into more detail about the addresses of the foreclosed properties listed in the bulletin board outside the town hall: Hong Kong, Singapore, U.S., South Korea, and Australia. He also says there are Japanese addresses and names. 

Some of the properties that have been sold recently were bought from people who bought the plots in the 1970s and 80s, and when he checked the registration they were all bought by people or companies with foreign addresses. But even plots that were bought by parties with Japanese addresses were actually bought on behalf of foreign entities. In some cases, registration was shifted to these entities after they moved their business addresses to Japan, but even in these cases, the owners were delinquent with property tax payments.

One local told Matsuura that Japanese people are not really interested in buying property in Niseko. “I worry that this area will become like Yuzawa in Niigata Prefecture, where a lot of resort condos were built, driving down the value of land overall because of too much supply.” Because while there is construction going on, it isn’t on the same scale as property purchases, thus suggesting that people are still buying land here as investments in the hope that prices will continue to rise. Outside of Tokyo, such speculation is rarely sustainable, as the bubble period proved. In April a contractor with a Chinese name that was building a resort at the foot of Mt. Yotei filed for bankruptcy after it failed to meet construction costs. Another hotel located near the Hirafu ski area owned by a foreign company was seized by creditors in 2022. The local government in 2025 joined in the seizure due to the company failing to pay its property taxes. 

One reason for the unchecked speculation and subsequent failure to pay bills by foreign entities, according to Matsuura, is that both the local and central governments don’t seem able to enforce their own rules. In June, the Hokkaido governor, in fact, called on the central government to “make foreign investors comply more stringently with domestic regulations,” thus indicating that if the government, meaning the LDP, is worried about foreigners buying up property irresponsibly, they partially have themselves to blame. 

According to an article in the Sept. 3 edition of Asahi Shimbun, 40 percent of all recent housing loans are so-called pair loans, meaning they are taken out by married couples, with both spouses’ individual salaries taken into consideration. In the past, banks did not offer loans to married couples but rather to one or the other spouse. This policy necessarily changed when women with careers married and earned salaries comparable to their husbands’, but mainly it had to do with affordability. The cost of buying a house outstripped the ability of a single breadwinner to pay it in a comfortable manner, so banks adjusted. 

But now, says Asahi, even pair loan seem insufficient to buy a new condo in Tokyo, whose prices have been increasing nonstop. The article uses as an example a couple in their mid-30s living in Meguro who want to buy a bigger place in a neighborhood that is more amenable to raising children. They have two strict criteria that made their search more difficult: they want to live within Tokyo’s 23 wards, and they want a property that will retain its value over time, which is why they insist on buying a new condominium. They had already abandoned one initial criterion—the condo should be within reasonable walking distance to a convenient train station, because all the realtors they talked to said that there are “waiting lists” for new condos with ready access to transportation. 

But the couple lucked out. Last spring they entered a lottery for the chance to buy a new condo in Minato Ward and beat out five other prospective buyers. The unit in question is an 80-square-meter 4 LDK that is only 6 minutes from the nearest station. However, the price is pretty steep: ¥160 million. So in order to make the deal happen the couple sold the condominium where they were living (Asahi does not say how much they got, which would be helpful is assessing how much a used condo in pricey Meguro is going for in real terms) and took out a 40-year variable interest mortgage of ¥150 million as a couple whose combined income is ¥20 million a year. 

The whole idea of a pair loan is to make it easier for a married couple to borrow money by taking into consideration their income as a household, and as indicated above, this borrowing method is slowly becoming the norm for buying a home. A survey by the company Recruit found that in 2024 pair loans accounted for 37 percent of all new mortgages in the Tokyo metropolitan area. In 2018, the rate was 27.7 percent. The use of pair loans has roughly followed the increase in prices of new properties. One real estate research lab found that, nationwide, the average price of a new condo increased by 27 percent between 2018 and 2024, while in Tokyo the increase was 56 percent over the same time period. As has been widely reported, the average price of a new condo in the 23 wards as of July was ¥135 million.

More signicantly, the Ministry of Justice says that in 2022, the average debt balance for a family of four for the first time exceeded the average family annual income, meaning that while housing prices have gone up, income has not, or, at least, not as much. 

All these factors contribute to the greater prevalence of pair loans, which increases the risk of default. If either spouse loses their job or sees a substantial drop in pay; or if a catastrophic illness strikes either spouse or even one of their children, necessitating taking time off from work; or if the couple divorces, the family could lose their home. Divorce is particularly messy with pair loans, since one of the terms is that each spouse becomes the guarantor of the other, meaning that if one spouse cannot pay their share, the other is required to make up for it. 

Another issue is refinancing, a common course when a family requires more disposable income for whatever reason. For instance, the couple could extend the period of the mortgage in order to reduce monthly payment burdens, but in doing so interest on the loan increases, which means in the long run the couple pays more and may thus have less savings in their old age.

All of these factors are par for the course when borrowing money, but according to Asahi, another economic research center found that 41.6 percent of the pair loan borrowers they surveyed “regret” taking out the loan, thinking that a “single person” loan would have had more agreeable terms, or that they should have paid a bigger down payment, or that they should have understood the “protections” in the loan contract more thoroughly before signing it. As one of the researchers said, a family taking out a pair loan should first come up with a repayment plan that offers financial breathing room in the case of any development down the road. If money is expected to be tight, they shouldn’t resort to such a loan because the chance of default is more likely. 

Another problem, and one that is certainly not limited to pair loans, is that couples tend to opt for a variable interest rate since, initially, the bank sets it lower than a fixed rate. Inevitably the interest rate will go up and monthly payments may increase as a result—the Bank of Japan last year implied that it would likely change its low-interest policy sometime soon. In fact, that was one of the reasons the Meguro couple felt they had to buy a new condo right now, because they wanted to get the lowest interest rate without realizing that by choosing variable instead of fixed, the rate would probably be going up anyway. Asahi says that 80 percent of all borrowers choose a variable rate. 

Of course, these problems are mainly a concern for people who want to remain in Tokyo. And it’s not just people looking to buy. Recent news reports say that those who rent in Tokyo on average now have to put one-third of their income toward housing. The gap between living comfortably in Tokyo and living comfortably anywhere else just keeps getting wider. 

The perhaps not-so-surprising media dominance of the right-wing Sanseito in the recent general election is predicated on the party’s perceived prioritizing of Japanese citizens over foreigners. As others have already pointed out, this analysis is an over-simplification of certain Sanseito characteristics, the most obvious one being its motto, “Japanese people first,” which has given rise to a contrasting hashtag, #gaikokujinfirst, meaning “foreigners first,” or the idea that foreigners in Japan have privileges that Japanese don’t. This belief is based on a few loopholes that Sanseito has fixated on, in particular a means for some tourists to be able to exchange their home country drivers licenses for Japanese ones. The present administration, spooked by the popularity of Sanseito, has pledged to study whether foreigners are getting special breaks and tighten up rules accordingly. 

So it will be interesting to see if the government does something with another loophole related to the private lodging (minpaku) law, which regulates short-term private accommodation transactions, like those handled by AirBnB. The law is fairly strict about how many days a year an owner can rent out their property, as well as where and how they can operate. But the government did allow for “special districts” throughout Japan where such regulations are more relaxed, and one of these places is Osaka. 

According to a recent article in the weekly magazine Aera, Osaka was given this special status during the runup to the current Expo 2025, since it was believed that Osaka did not have enough hotel rooms and other short-term accommodations to handle the expected demand. Consequently, Osaka has become a veritable bastion of private lodgings, causing problems on various fronts. Prof. Yoshihisa Matsumura of Hannan University is doing field work on the subject in Japan, and told Aera that he sometimes walks around Osaka neighborhoods with an open map looking for private lodgings and is often approached by local residents who think he is looking for one of these lodgings as a customer. Or they think he is a “Chinese realtor,” because many private lodgings in Osaka are owned by Chinese, be they residents of Japan or China. The local residents are afraid that Matsumura is scouting out possible new properties to acquire for Chinese clients. 

Obviously, these residents don’t like it that Chinese are buying up properties for short-term rentals, the ostensible reason being that guests who use these lodgings are loud and don’t follow local ordnances. But in truth the “trouble,” as it were, goes deeper. Most of the properties that Chinese are buying are rental apartments, which means the new owner will evict any present tenants. The Aera article cites several examples of tenants who refused to leave but were then forced out because the new owner increased their rent. After the tenant leaves, the new owner renovates the property in order to make it more appealing to travelers. 

There are also more ambitious buyers, usually developers or real estate companies, who buy up entire buildings and either kick out all the tenants or tear the building down and make a new one that is completely made up of short-term private lodgings that are sold piecemeal to potential lodging landlords. In some cases, these developers and real estate companies have Chinese connections and they work directly with Chinese buyers in China who see the purchases as good investments. 

Of course, not all the new minpaku properties are owned and run by Chinese. Most are still Japanese, but the conspicuously high number of Chinese investors points up a different motive that has less to do with profit-making: immigration.

When a Chinese person buys a property with the intention of making it into a minpaku, the Chinese person then registers themself as a business owner in Japan, even if they remain in China. They then hire a management agent to run the property; or, if they bought the property from a developer, the developer will manage it. Farther down the line, the Chinese owner may move to Japan after attaining a business owner’s visa, which requires only ¥5 million in capital. They can then live in Japan, along with their family, indefinitely as long as they are registered as a business owner. Even farther down the line they can apply for permanent residency. 

So for a lot of these Chinese minpaku owners, making money from the property is really secondary. The primary purpose is to get a visa to live in Japan, where the health care and education systems are better than they are in China. 

Aera points out that the real aim of the business management visa is to encourage “young people” from overseas to come to Japan to start their own businesses and reinforce Japan’s “international competitiveness.” But in China business owner visas are seen as immigrant visas. There are whole handbooks online in China instructing people how to get a business management visa, as well as lots of ads from Chinese real estate companies selling Japanese properties, mostly in Osaka. Many of these properties are priced higher than market rates in order to discourage Japanese buyers, but for Chinese buyers looking to move to Japan, it’s worth it. 

As Matsumura says, it’s all perfectly legal, and he wonders if once the expo is over the government won’t revise the law regarding business management visas, because more people in Osaka are becoming leery of all these new Chinese immigrants. Matsumura is afraid that many of these people do not make the attempt to “belong” to Japanese society. In other words, he’s afraid that their obvious otherness will spark a fiercer form of xenophobia among Japanese people, thus making it more difficult for all foreign residents, regardless of why they are in Japan. 

The Japanese media is reporting that monthly fees for condo owners have increased significantly in recent years. We’ve often talked on this blog about these monthly charges, namely building management fees and repair fees, and how in many cases the repair fees were initially set low by developers so as to make them more attractive to buyers. Since these fees go into a fund that will be used down the road for large-scale repairs, often they are insufficient to the task, and when the repairs are finally undertaken there is not enough in the reserve fund and owner-residents have to cough up more money. In a sense, the recent increases in repair fees is a reaction to this reality, since more and more condos are reaching an age when large-scale rapairs are required.

Consequently, the reserve funds for long-term repairs can be quite fat, depending on the size of the building and the number of residents, and with construction companies that specialize in residential buildings losing business because of the decline in population they are eyeing these funds as they expand into renovation. A recent article in the Asahi Shimbun reported on a strange trend that seems to be related. Apparently, non-residents are impersonating residents in order to get into homeowners association meetings so that they can vote on approving plans for repairs, usually earlier than needed. It’s believed these imposters are working for construction companies who want the work.

Asahi cites several cases in the Tokyo metropolitan area. In May, two employees of construction contractors were arrested for “trespassing” after pretending to be residents of a condominium in Kanagawa Prefecture. Since 2024, the two men had attended the condo owners’ association meetings a total of four times using names of real resident-owners. One of the building managers was alerted to the possible imposture and checked one of the names with the real owner, who eventually confessed that he had allowed one of the men to use his family name in exchange for some kind of “reward.” 

The same thing happened at a condo in Chiba Prefecture. A man who did not live in the building attended 10 owners association meetings since July of last year by pretending to be the son of a resident-owner. Another resident who knew the owner in question felt that the “son” looked nothing like the resident and reported their suspicions to police. 

A woman from a different condo who talked to Asahi said that in March of 2024 she received a flyer in her mailbox soliciting “interviewees” for a survey who would be compensated for their participation. She answered the ad and learned that the inquiring company was an Osaka-based marketing firm that was doing undercover work. They needed identities of real people so that they could patronize restaurants and other service providers to check their service. The woman thought it would be her doing the undercover work and thus could get some free meals, but when she met the martketing company liaison in person she found out the real purpose. The liaison said the  service investigation was a ruse, and that their real mission was to check condo management associations to make sure they weren’t wasting or otherwise misusing funds. The liaison asked the woman if he could use her husband’s name to attend meetings. In exchange she would be compensated on a monthly basis. She accepted the offer.

Later, a different man contacted her saying he would impersonate her husband’s brother, and thus needed personal information in order to make the imposture more convincing. He even asked her for a duplicate key so that he could enter the building freely. She did as she was asked. 

Eventually, someone from building management found out and visited the woman. When she tried to contact the marketing company she got no reply and eventually confessed everything to management and later the police, who arrested one of the imposters in early June.

Another article in the Asashi reported on how The Fair Trade Commission has found that some larger contractors have formed cartels to fix prices for large-scale repair and renovation work. Owners associations, of course, usually put out bids in order to find the cheapest contractor, but the cartel system means that the prices are already determined. Since March, the FTC has investigated 30 companies they suspect of price-fixing.

Owners associations have two methods of choosing contractors for repair work. They either choose two companies, meaning one for planning and another for execution, or choose one company to do both. With the first method the hired consultant studies what work needs to be done and then they find a contractor and instruct them on how to carry out the work. Then they monitor the work. The advantage of this method over the other one is obvious: the repair contractor is supervised by a third party in the interests of the homeowners. However, the FTC has found that there is often collusion between consultants and contractors, which would be a violation of antitrust laws. 

The imposter scheme is closely related, since the non-resident mole’s job is to sway the owners’ association in various ways that could benefit their client, which are usually contractors. For instance, they can call for repairs at an early date. Typically, large-scale repairs are carried out every 25-30 years, but contractors are now trying to persuade associations to carry them out every 15-20 years. Also, of course, the imposter will try to get the association to hire a certain contractor or a consultant who has ties to the contractor. 

If all this sounds difficult to pull off, it would be if owners associations weren’t so weak to begin with. As we’ve reported in the past here, not many owners want to participate in regular meetings and so it’s often the outside building management companies who make decisions since they tend to be voting members of these associations. Under such circumstances aggressive non-resident agents can be persuasive, especially if there is more than one. In any event, these outside building management companies may have connections of their own since many were given their job by the original developer of a property and were never replaced by the owners association. In the end, there are many ways to game the long-term repair system. 

The current income tax deduction on housing loans will expire at the end of this year, but, as in the past, it will probably be renewed in some form. The tax deduction was first implemented in 1972 and has been revised repeatedly ever since. The current deduction, revised in 2022, cut the rate from 1.0 to 0.7 percent of the balance of the loan in a given year for up to 13 years. Originally, the deduction was 1 percent of the entire price of the house for up to 3 years, and has fluctuated rather liberally over time, depending on how desperately the government wanted to use home sales as an economic stimulus measure. 

That’s why the reason the deduction will likely be renewed again isn’t just that it’s become an expected feature of home ownership. On April 21, the welfare ministry announced the results of a survey of people who bought homes between 2022 and 2025. Twenty-one percent of the 8,400 respondents said that if there had been no tax deduction on housing loans they wouldn’t have purchased a home. Kyodo says that this survey will be used to decide on whether to extend the deduction after this year, with the implication that it will be. Among respondents, only 20 percent said that the housing loan tax deduction had “no influence” over their decision to buy a home. 

Higher income buyers have lost something over time. Currently, anyone making more than ¥20 million a year is ineligible for the deduction, though the ceiling used to be ¥30 million. The carryover has also been decreased. If the amount of the tax deduction turns out to be more than the income tax owed the government, the excess can be applied to local taxes, but only up to ¥97,500. The maximum used to be ¥136,500. 

The housing loan tax deduction has always been controversial, and not just in Japan, because it’s basically discriminatory. Why should people who can afford to buy a home get a special break on their taxes? The ostensible reason is to promote home ownership, which is generally assumed to be a good thing for society, but it ignores the situation of renters. Landlords in Japan do not get a deduction when they buy property because it only applies to people who purchase a home they will live in, but landlords undoubtedly pass the cost of all the taxes they pay on to their tenants, so landlords always have a means of handling tax issues. They don’t need a deduction. The only purpose of the deduction for homeowners is to encourage sales, which helps the real estate and construction industries, not to mention the banks that provide the housing loans. 

However, there is one aspect of Japanese tax policy that the welfare ministry survey, as well as the media, doesn’t take into consideration, and that’s the consumption tax (CT). Though the consumption tax gets a lot of press, especially right now with inflation so high and consumption in general flagging, no one ever discusses it in relation to home purchases. But every house or condo that is bought from an agent or a developer is subject to a 10 percent CT levy. Land is not subject to CT, nor homes that are sold directly by the owner, but everything else costs an extra 10 percent, including the realtor’s fee, and when you consider that a home is certainly the biggest purchase anyone will ever make in their life, it’s a huge outlay. The income tax deduction for housing loans is a pittance in comparison, so in the balance the purchaser is not getting any savings when it comes to taxes in general. 

And, in fact, the government seemed to take the consumption tax into consideration after it was first implemented in 1997. Two years later, the deduction was revised upwards to a maximum of ¥500,000 the first year and ¥50,000 thereafter for up to 15 years, depending on the balance. Since then, however, the deduction has been revised downward several times, despite the fact that the CT has been increased several times. 

So while a substantial portion of home buyers told the government they wouldn’t have bought a home if the tax deduction wasn’t in effect, no one in the welfare ministry asked about the CT effect. As already mentioned, the survey is carried out to decide whether to extend the housing loan tax deduction. Those who wish to reduce the CT in some way, such as the main opposition party, the Constitutional Democratic Party of Japan, might do well to carry out their own survey to find out how many people who are not planning to buy a home due to money issues might change their mind if home purchases were not subject to CT, but nobody thinks about this because nobody brings it up. The CDPJ’s main proposal is to exempt food from the CT, so how about housing, which is also considered a necessity for basic living? 

If this sounds unrealistic, one should imagine how it would affect sales if all prices advertised for new homes included the CT, which adds literally millions to the final price and increases the amount of money the buyer will have to borrow. Once all these costs are taken into account, regardless of the income tax savings through the deduction, the case for buying over renting becomes less persuasive given that, in the end, the money spent on a home isn’t going to come back to the buyer any more than the rent paid by the tenant is going to come back, since the value of homes (as opposed to land) depreciates significantly in a relatively short period of time. Return on investment for Japanese homeowners is never guaranteed owing to Japan’s housing policies, which isn’t necessarily a bad thing but if consumers knew the real situation they might actually decide that renting would be less stressful.

The home ownership rate in Japan has stayed around 60 percent for the past five decades, a bit less than the world average. However, according to the Paris-based global market research company, IPSOS, that rate may be dropping in the near future. 

Recently, IPSOS conducted a survey of 22,000 people in 30 countries and found that the “desire” for home ownership was the lowest in Japan. About 42 percent of the Japanese people surveyed who do not presently own homes said they were planning to buy a home in the future. The average among the 30 countries was 71 percent, with the U.S. at 68 percent and Germany just above Japan at 48 percent. 

Of the reasons given for not planning to buy a home, the most common among Japanese respondents was high taxes, mentioned by 52 percent. The world average of people saying that high taxes was a reason for not buying a home was 28 percent. Italy was closest to Japan at 42 percent. The second most cited disincentive in Japan was the high price of property. 

Broken down further, 68 percent of the Japanese respondents said they wanted to buy a home but didn’t think they would be able to afford it. About the same percentage of Germans and Australians said the same thing. Of course, the real question here is how many people do not even want to buy a home, which would tell us more about people’s attitude toward investing for the future. As we’ve said in this blog many times, outside of the main big cities, one’s home is not an investment in terms of getting anything back from it in the long run, so while home ownership does have advantages over renting, mainly that it gives one a guaranteed place to live, in terms of money spent there may not be enough of a difference, something more people may be realizing these days. 

Coincidentally or not, the land ministry also conducted a survey in late 2023 whose results were reported in the housing magazine Suumo in February. The ministry surveyed 72,000 heads of household nationwide covering all ages and incomes, with 72.4 percent of respondents owners of their homes and 27.6 percent renters. 

In terms of satisfaction, 79 percent of the homeowners said they were satisfied with their present situation, while 74 percent of renters said the same thing. However, when asked about the future, the results were startling. To the question, “If you were to move again, which would you prefer: owning or renting?” Only 33 percent of both categories said they wanted to own while 49 percent said they wanted to rent. According to Suumo, this is a huge change since 2003, when the land ministry conducted a similar survey. Almost all the respondents in that survey said they preferred to own. Broken down a bit further, most of the owners and renters who said they wanted to own their next abode said they would prefer a new home, but there was a notable increase over previous surveys in respondents who said they would be fine buying a used home. 

One reason for the presumed high portion of homeowners who said they would rent if they moved is the fact that almost half the heads-of-household surveyed were over 64, meaning they have likely lived in the same place their entire homeowning lives and probably think they don’t need to purchase another one in their old age. One stone cold statistic that’s always been true of Japanese housing is that the older the cohort, the higher the home ownership rate, so the real question is, how do today’s home ownership rates among people still in their so-called productive years compare to those in the past? The IPSOS survey would seem to indicate that it’s not as much and will continue to decline.