A cottage industry has spun up in Japan in the past few years offering abandoned houses, known as akiya, to foreigners.
Many countries have stock of underused housing, but Japan is certainly one of the worst offenders. Since the post-COVID-19 pandemic reopening, there has been a surge of interest in akiya among those priced out of their markets at home. Buyer beware: Living in poorly insulated, socially isolated dwellings in the countryside can often be less My Neighbor Totoro and more torturous.
However, the boom has highlighted how easy it is for those outside to buy property here. Indeed, the lack of restrictions or even disincentives borders on the absurd. It is becoming a political issue. While abandoned houses in rural areas are not much of a concern, in Tokyo and other major metropolitan centers where property prices are surging, some are pointing an accusatory finger at international buyers suspected of triggering the rise.
Illustration: Yusha
In the capital, the average cost of a new apartment has topped ￥100 million (US$700,037) for two years running. In the most central areas, the price of a second-hand, 70m2 apartment has doubled since before the pandemic, according to real-estate consultancy Tokyo Kantei Co, a pace of increase practically unheard of in a market once synonymous with flatlining prices. In 2022, I wrote about the affordability of Tokyo property. Just three years later, many are feeling priced out.
There is a raft of potential culprits. New apartments are in short supply, with many prime plots already redeveloped in advance of the Tokyo Olympics. Inflation is contributing to increasing construction costs, and there is a worker shortage thanks in part to a crackdown on overtime hours. The rise of the “power couple,” dual-income households of well-paid professionals, is also a factor as more women join the workplace and, in turn, the property market.
However, increasingly, the spotlight is falling on foreign buyers, particularly wealthy Chinese, seeking a safe place for their capital and drawn by Japan’s political stability and social safety net. Lawmakers and commentators have been raising the lack of restrictions on property in parliament over the past few weeks, as well as in the media. Former international soccer-star-turned-investor Keisuke Honda summed up what many think when he recently tweeted that he thought foreigners should not be allowed to buy land here.
One thing that clouds the conversation is the lack of reliable data on transactions. Japan does not keep records of the nationality of buyers. One recent survey of developers by Mitsubishi UFJ Trust & Banking Corp suggests that 20 percent to 40 percent of new apartments in central Tokyo were being purchased by foreigners. Authorities are belatedly beginning their first-ever survey to establish the facts, NHK recently reported.
Amazingly, it was only this decade that Japan first began making it harder for foreigners to buy properties even in sensitive areas next to military bases or nuclear plants. Beyond that, it is open season: Buyers do not even have to be resident in the country, there are no additional taxes or stamp duties for foreign purchasers, nor are there extra levies for second or holiday homes.
Japan is an outlier in the region. Singapore doubled its stamp duty on foreign buyers to 60 percent in 2023 as part of a series of disincentives, while Hong Kong only recently removed a similar curb to breathe life into the property market. Elsewhere, Australia announced a two-year outright ban on foreigners buying some homes, a step Canada last year extended.
To be clear, Japan is nowhere near needing to take such radical steps. Indeed, it is ironic that this conversation is happening at all, given the frequent complaints about stagnant property prices. However, with the secret out about Tokyo’s international attractiveness as a place to live, it is a good time for lawmakers to get ahead of the conversation — before it fuels further public discontent.
In an increasingly globalized and unequal world, residents — whether Japanese or foreign — should surely be given priority above speculative buyers looking for a rarely used second home. If nothing else, a government that needs to boost its coffers should be maximizing its tax revenues. Given the shortage of supply, it should also discourage owners from holding properties that are rarely occupied, at least in Tokyo’s central areas. It is not unreasonable for Japanese to be upset about the ease with which Chinese investors can buy in Japan, when the reverse transaction is not even possible.
Japan’s remarkable stability during its economic lean years was in large part due to the availability of basic services such as housing, something many Western economies have failed at, fueling popular discontent. As Tokyo re-emerges, it should take care not to repeat others’ mistakes.
Gearoid Reidy is a Bloomberg Opinion columnist covering Japan and the Koreas. He previously led the breaking news team in North Asia and was the Tokyo deputy bureau chief. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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