Forums / Property Investing / General Property / Some Notes on Real Estate in Japan

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  • Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,173

    I have been in Japan for about 2 weeks now, come over for a funeral.

    While I have been here I have been looking into real estate.

    It seems the market here is very different to Australia.

    Firstly, prices have been dropping since the ‘bubble’ burst in 1990. People are generally farily pessimistic with regards to property. They fear prices dropping further.

    Prices in the Osaka area (2nd biggest city) are around $300,000 – $400,000 AUD for a house. This is about 15min to the cit centre. Sizes are generally much smaller than Australia, especially land size.

    The cheapest unit I have seen was for around $80,000 AUD, in the same area of Osaka.

    Unlike Australia, it seems older houses here depreciate in value very quickly. Anything over 30 years old is very cheap and people very wary of buying.

    This seems to be a lot of construction ocurring. Many people are pulling down old houses and building new ones.

    There are also renovation rescue type TV shows. One involved gutting a terance style house and rebuilding it. All very nice and space saving efficent design. The cost was listed as about $100,000.

    It is possible to get 100% finance here for new buildings, but generally it seems finance is limited to around 70% LVR. Rates start at around 1%, but this is like a fixed intro rate for 2 years. standard variable rates are around 3-3.5%. You will generally need an income of around 4 times your repayments to qualify. it is generally hard to qualify for loans as the banks lost billions when the bubble burst.

    Foreigners can get loans from Japanese Banks, but they will need to have stable employment here and to hold at least a permanent visa (which seems easier to get here than in Aust).

    Yields are around 7%. Most property would therefore be postively geared on 100% borrowings. When I ask people why they don’t buy then, when it is cheaper to pay a loan then it would be to rent, they cite property taxes, decreasig values, and flexibility with renting etc.

    Property taxes don’t appear to be huge. From what I found a tax like land tax may be around $700 per year for for average house. Nothing to worry about, but there may be other taxes I haven’t found yet. There is a 5% GST and death tax as well.

    Building standards are differnt. Stairs here are very steep. Some are like ladders – probably around 70 dgrees -almost vertical. Many older houses do not have sewerage, having a smelly pump out system. Front doors often open up straight onto the road, and many houses completely cover the land, ie no back yard or front yard.

    Car parking is a problem, especially with Big cars. Some houses have half a car space, so the car hangs out onto the road. Many have to rent car spaces elsewhere.

    Property investing doesn’t seem to be a national sport like it is in Australia. At a large bookshop, there were a few books on loans and property investing, but they seemed fairly basic.

    Japanese are big readers, and the books are cheap. There are many many books on the general economy, trade, investing in China etc.

    renting is also different here. There seems to be many different kinds of bond money. Shikikin, Reikin Real estate agents commission and others These can all add up to many months of rent (maybe 4) and usually do not come back to you on exit. This may be one reason why people here tend not to move house much. However, not every place for rent requires all of these up front payments.

    What else is there to say?

    Does any one have any questions?

    Terryw
    Discover Home Loans
    North Sydney
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    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Profile photo of BonbeachBonbeach
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    @bonbeach
    Join Date: 2004
    Post Count: 214

    Hi Terry

    Sounds like an interesting place…

    Would you be able to post some photos of typical properties over there? (I dont know if you can even do that on here…)

    Death Tax?????

    Hows the weather? Snow?

    Dev* [kid]

    Profile photo of baloobaloo
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    @baloo
    Join Date: 2003
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    I wonder if you can get earthquake insurance on buildings, and if so, what the premiums are.

    Profile photo of TerrywTerryw
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    @terryw
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    Hi Baloo

    I beleive that insurance doesn’t cover earthquakes as they are rather common (theres been 2 since I arrived), but I will ask around.

    Hi Devil

    It is boiling hot here. Hotter than Thailand at the moment. Sometimes reaching 40 degrees.

    I have collected a few pamplets and will look for links to houses for sale so you can see a few pictures.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Profile photo of DazzlingDazzling
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    @dazzling
    Join Date: 2005
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    Terry,

    Great post, really interesting and well covered on the generalities of the market.

    Was there any mention of these ‘intergenerational loans’ that I’ve heard about. That is, the grandfather takes out the loan, father continues paying and eventually the son gets to pay the loan out ?? Is that myth or fact ??

    Cheers,

    Dazzling

    “No point having a cake if you can’t eat it.”

    Profile photo of TerrywTerryw
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    @terryw
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    Hi Dazzling

    I have heard of that before, but do not know if it is myth or fact. I think these days prices are failry reasonable, so their is no need for that sort of loan anymore. a 35 year term is the maximum that I have seen mentioned.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of TerrywTerryw
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    @terryw
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    Originally posted by baloo:

    I wonder if you can get earthquake insurance on buildings, and if so, what the premiums are.

    Hi Baloo

    It seems most buildings are insurance against earthquake damage, and that the policy is taken out when the building is constructed. Approx $5000 was one figure someone quoted me.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,173

    Another point. Height of a building is resticted based on how wide the road is. Some roads are very tight, so it is not possible to build over 2 stories.

    I also read today that the average price of land has increase in Tokyo for the first time in 13 years. The increase was only small, at around 0.5%, but it is a start. ANd this may have a positive effect on people.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of jopiejopie
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    @jopie
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    Hi Terryw,

    i just wanted to say that i found your post extremely interesting, as i am i big ‘Japan Fan’.

    cheers mate.

    Jake

    Profile photo of aussiexjaussiexj
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    @aussiexj
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    Don’t forget that Osaka cops about 22-26 typhoons per year often with devestating results. Tsunamis also hit Osaka. There is a major fault line just of the Osaka coast. Still love Japan though. What do you know about China. Growing share market, what about real estate?

    AXJ

    Profile photo of TerrywTerryw
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    @terryw
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    AXJ

    A friend of mine is investing in China, she purchase a postivly geared property in Shanghai city, and it has doubled in value within 2 years. It seems there are good deals there, but you have to be careful in certain areas which have already boomed.

    I am currently in Thailand, and have just leased a studio unit, partially furnished for about $170 per month. Nice and new too!

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of dmichiedmichie
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    @dmichie
    Join Date: 2005
    Post Count: 245

    Fascinating post Terry W.

    Its interesting to see the wildly different attitudes to property investing in different countries. Most of the Anglosphere (UK, USA, NZ, Aus etc) has gone property crazy in recent years, while most of continental Europe and Japan couldn’t be less interested.

    In Australia, perhaps as much as 50% of our economic activity revolves around property, whereas I’d guess less than 10% of the Japanese or German economies would be property related.

    Makes you wonder how and why so much ‘wealth’ has been generated in Australia recently out of buying and selling houses. Where has all the money come from?

    Profile photo of kerwynkerwyn
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    @kerwyn
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    Post Count: 145

    Hi Terry
    Good post.
    I met a Thai lady a few years ago who was working in a Thai Restaurant as a cook. She was a lawyer in Thailand but could make heaps more money here as a cook. She was building a house in Bangkok and all the money she earned was going back there to complete the house. I saw the pictures and it was a really nice place.
    Would be interested in how much houses cost in Bangkok now.
    Kerwyn.

    Profile photo of TerrywTerryw
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    @terryw
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    Kerwyn

    I am having language problems in Bangkok. Not as easy to learn Thai. I have a friend that purchased a hosue last year for 900,000B = $200,000 at current exchange rates. There are plent of apartments etc avertised in English, but I imagine these are inflated prices for foreigners.

    In Pattaya, houses near the beach seem to be going for about $1,000,000.

    Will try to find out more.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

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