Buy a house in Japan? #2
A while ago, I wrote about the real estate market in Japan. Discouraging? Maybe so, but I don’t want to give up, I want to see whether a deal is possible.
The two houses we visited last week are quite different, but they do share some common features. We are looking for a rather spacious house (according to Japanese standard at least), that is more than 100m2, while the average is around (max) 80m2 in Tokyo, but not necessarily close to the station.
The first house we saw was a “light steel frame construction” (軽量鉄骨象 keiryô tekkotsu zô), built following “Hebel” (へーベルハウス = “Hebel haus”). It is 104.95m2 (land: 121m2), located at about 19 min on foot from H. station (uphill). The house is not more than 6 years old, with a ten-year warranty, and is said to be “a 60-year housing”. The company who built it (Asahi-Kasei) offers a maintenance program with regular check-up (every 5 or 10 years). The real estate agent told us that the land should be worth not less than 700,000 yen / tsubo (坪) i.e. about 212,121 yen / m2. And the house should be worth around 13,000,000 yen, which gives us 120 m2 x 212,121 yen / m2 + 13,000,000 yen = 38,000,000 yen. According to the agent, this is a really interesting price, given the fact that a new house in the area is about 40,000,000 yen. The house is “high-tech” equipped, with code-locking, whole electric kitchen, halogen lighting, etc. and (except the walls that need to be refreshed) it is available right away.
The second house we saw (see picture) is located about 17 min walk from T. station (next to H. station), with a living surface of 115.82m2 on a 132m2 land (somewhat bigger than the previous one). The big difference: it is a wooden construction (木造) and it’s 17 years old. The real estate agent says the land is worth about 800,000 yen / tsubo, i.e. 242,424 yen / m2 and the house worth 0! In Japan, a wooden house is completely looses its value in about one generation. This gives us 132 m2 x 242,424 yen / m2 + 0 = 32,000,000 yen. The house is sold at 31,000,000 yen with a possible 1,000,000 yen discount. The inside is however in bad shape: everything needs to be refreshed: walls, floor, plumbing, etc. … all this would cost about 4,000,000 yen. Also note that T. station is a bit more valued than H., because of the facilities and shops nearby. And the way to the house is flat.
My first impression: both houses cost about the same price, 35,000,000 yen (if you include renovation fees for the 2nd one). The big difference is that the T. house is considered as 0 yen worth, and the deal is therefore mainly about the land. The real estate agent also told us that a wooden house costs more in maintenance than a concrete building (about 10,000 yen a month for a wooden house). I am however tempted to think that the wooden house is more interesting, based on the fact that the land will (probably) not loose much of its value, and that the house can be inhabited although it is considered worth nothing.
Later, we went to see the second house again, and we met a neighbour, who told us the land was probably not worth more than 700,000 yen / tsubo (rather than 800,000 yen / tsubo). He also told us: “Many people came to see the house but it is still not sold yet; (I probably shouldn’t tell you that, but) this house is not worth much… Take your time to choose.” –1st lesson: don’t believe everything real-estate agents tell you!
The agent told us the house was now the property of a bank (it was taken away because the owner couldn’t pay back the mortgage), and if this house wasn’t sold 2 weeks later, they would sell it on auction (much less than the current price), most likely to a real estate agent who would renew it and sell it for a better price… (I told you: Japanese like stuff that look new)
Since I haven’t seen many houses yet, I can’t tell you whether this one would have been a good pick, but I still think if I had to choose, I’d opt for the wooden house. And you, based on these data, what’d be your take?