Things you didn't know about real estate in Japan

One of the nice things about reading the British weekly The Economist is that, even though it's still U.S.-centric, it's much less so than anything you'll read in the U.S.

It covers the entire world every week and, oddly, leaves the home country to bat clean up in every issue. A look at the Table of Contents reveals the following lineup - United States, The Americas, Asia, Middle East and Africa, Europe, Briefing, Special Report, and then, finally Britain.

Maybe there's a good reason for that. Modesty? Anybody?

You can learn a lot about the rest of the world just by flipping through these pages week after week and reading something here and there. The eclectic mix of fact, opinion, and dry humor , however, sometimes leaves you wondering whether you're actually being brainwashed somehow.

Relying on a single source for news outside the U.S. could be dangerous.

Then again, if you only have one regular source for international news, you could do much worse. In fact, having any information at all about the world outside the U.S. that is not reported by the U.S. puts you far ahead of most Americans who are dangerously inward-looking.

So, what was there to learn in the current issue?

What great revelation was there about foreign lands that will lead American readers to a more complete view of the world?

Japanese real estate.

For any or you who were similarly wondering why you would always hear about Japanese land prices or the Japanese property bubble instead of Japanese home prices in recent years when the U.S. housing bubble was inflating and the inevitable comparisons were being made to the late-1980s Japanese stock market and real estate bubbles, you'll find the answer in this story.

Japan's property markets
HOUSES in Japan are supposed to be built to withstand earthquakes. Even so, few of them defy demolition for more than a few decades. The housing stock is amazingly young: more than 60% of all Japanese homes were built after 1980 (see chart). That is because there is almost no market for old homes in Japan. New legislation to be put forward this month will try to remedy that.
...
In post-war Japan land has value but buildings do not. The law separates the ownership of the land and the structure, so the two are distinct in Japanese minds. After the war, the government sought to foster private home-ownership by offering tax incentives for new buildings. The policy was a great success. Arguably too great: by 1968 there were more homes than households to occupy them.

At the same time, tax burdens abound for selling land with old buildings. After around 30 years homes are demolished for new ones to spring up. Because the lifetime of houses is short, cheap construction materials are used and the buildings are not maintained. There is no tradition of do-it-yourself home upkeep. Just as there is little interest in secondhand furniture or clothes among the sanitation-obsessed Japanese, so too home-owners prefer to build anew rather than refurbish the old.

There is also a dearth of institutions and expertise that might oil the gears of a market in old houses, from surveyors to judge the quality of a property to banks that assess its value and provide a mortgage. As a result, where 89% of British homes have had more than one owner, and 78% of homes in America and 66% in France, only 13% of Japanese homes have ever been resold.

They go on to discuss how building standards will be improved and how new tax laws are being aimed at changing the way the Japanese think about land and the houses that go on them and, but the important stuff is excerpted above.

Who'd have thought that the Japanese wouldn't have their own version of "This Old House" or, during the height of the bubble years, "Flip this House"?