Low birthrate and ageing population pose ‘an urgent risk to society’, but can opening its borders to skilled overseas workers fix the problem?
Low birthrate and ageing population pose ‘an urgent risk to society’, but can opening its borders to skilled overseas workers fix the problem?
Its a complex and multi-layered issue, but the short gist of it is that many houses have become effectively worthless, there are thousands of abandoned properties as they are often impossible to sell, whether they are liveable or not, and there is no incentive to hold onto property and maintain it as the value always depreciates.
In most countries, a home will appreciate in value slowly over time, with some fluctuation, but in general it is a good idea if you can afford it, there is incentive to maintain and upgrade the property as it can be sold later in life or passed down to family. The Japanese market has some of that in valuable areas of course, well built up to code homes, with nearby access to public transport and services, same with older historic homes that are worth the cost of upkeep for cultural reasons.
The overall mindset is also different, a home is a depreciating asset, that will wear out and eventually need to be demolished and rebuilt from scratch.
There are a few videos on YouTube analysing it from different perspectives (just search Japanese housing market), and there are multiple perspectives, one being that treating housing as a valuable, appreciating asset is spurning an out of control market with ever increasing pricing pushing home ownership further and further away from the average person and Japans mindset of the home as a tool rather than an asset is a positive. But on the other hand going too far in the other direction where there is zero incentive to build a home that will last generations unless you are highly wealthy to begin with, no incentive to maintain or upgrade the building, they are simply a tool, a utility, an object that you need to have but is a depreciating asset to eventually die and be replaced with the next cheapest option.
It’s a completely different mentality that has also led to its own problems, instead of the homes not being affordable because of an increasing market, they are cheap but often entirely useless without great costs to bring them up to liveable conditions or modern codes and standards, but then there is little incentive to do more than the bare minimum because you will never sell it for more than you paid, it will be worth significantly less after you have spent your years in it.]
This is made worse by the lack of young people and ultra low immigration, the cheap houses that could be considered liveable or could be financially viable to bring up to standard have no interest because they are in dying country towns or rural areas with no reason to move there, there are no young people moving back to rural areas like we see in other countries because the home is simply a place to live, not an asset worth moving out of the city for, a dying town will die in japan, whereas other countries are seeing increasing rural growth due to it being the only remaining cheap housing and people having the mindset to invest in it as an asset, making it worth moving for.
See, this sounds kind of nice coming from a country where housing is almost impossible to get for love or money.
There is definitely a positive to not treating a home as an appreciating asset that’s for sure… but the point of my rant is that it can go too far and you end up with a different type of housing crisis where there are plenty of cheap homes to go around, but nobody wants them.
The proper way to calm the housing crisis in the west is to heavily disincentivise the mass acquisition of property as an investment, through strong taxation and fees that increase with every property purchased and funnel that money to first home buyers, new construction, and overhauling zoning laws. hell, you could go as far as to put a hard cap on how many separate properties any person or entity can own for the next 10 years… force that market to cool by squeezing the top.
An average 4 bedroom family home in the suburbs should never be 20-30x the average salary, that’s ridiculous. the market needs to crash in order to recover to a state where a normal person can pay off a mortgage at an affordable rate in 15 to 20 years, not 30 or even 50 as we are seeing in some areas. property should still be an appreciating asset, but not one that is able to be hoarded en masse.
The whole ideology of nimbyism has to die too, protecting your investment at the detriment of the greater good holds us all back. that’s another thing that is mostly non-existant in japan, there is no investment to protect in a lot of cases, so there is no backlash when the government or council want to change something nearby or build a block of cheap apartments nearby. If you vote for your local government and they say they will build a train station here, and a subsidised housing block there, you cant complain, it is for the greater good.
The problem with an appreciating asset is, that it will have to become less and less affordable to average people, because otherwise it can only maintain its value , keeping up with inflation. We must reach a state, where the value of the houses or the property itself stops increasing over time. That is always a result of relative scarcity. And it will backfire tremendously, when the boomers start dying off. The value has to be in the fact, that you dont pay rent and also can decide freely, how to change and do things around the house.
we’re approaching the endgame of of the housing as appreciating asset scam, since it’s now so far out of reach that newly born people cannot purchase anything at all. this will lead to a slump in demand for housing from anyone but rich investors, who in turn will need to find a way to make their inflated assets turn a profit and fail, since illegal hotels (AirBNB) are being cracked down on and rents that support the asset price cannot be paid by end users either. this will lead to popular desire for policy changes away from the housing as appreciating asset scam since it no longer works either to provide housing or wealth.
Thanks for taking the time to write this out. Learned something new today.
Sorry I like to rant and tend to ramble about topics I find interesting.
I just think it is an interesting example of what happens when homes are not treated as a valuable investment, as the opposite of the western view. both can be equally damaging and the balance in the middle is extremely difficult to maintain. you can have plenty of houses nobody can afford, or plenty of affordable houses that nobody wants.
I’m not the person you’re replying to, but also thank you for providing valuable insight and a neutral viewpoint! I found it very interesting, and, honestly, never considered houses could anything but increase in value over time. TIL.