Buying a house in Japan in the current interest rate environment – what would you do?

16 comments

1. If we get to 3-4% interest rate, the economic must be blooming. If you are positioned well enough that might not be a problem.
   On the other hand do you even really think that Japan economy might enter a new stage and ask for 3-4% interest rate? That will be over 5% inflation which will be undreamed of.

   Edit: typo.

2. The thing is, with homes that are cheaper in rural Japan you won’t be able to find a buyer in case you want to sell again.

   If you want to go for the cheaper option get ready to own that house almost permanently and with it the tax and maintenance that comes with it.

3. The rate is still a lot cheaper than rest of the world.

   Go visit your local bank to see how much they are willing to lend first.

   Please keep in mind once you have a job, government has an annual rebates that rebate part of your overall principal for over 10 years. (Used to be 1% for 10 years, now law changed, not sure the latest rebates)

   If you plan to stay in Japan for long term, why not getting a good enough one.

4. The decision is coming down to what do you want in a house: investment, or a place to call home.
   If it is the previous one, just rent cheap and use your money to invest, gain will outrun the running cost of having a house.
   The claim that house in Japan not appreciating overtime is a vague statement. Condominium near my house appreciate 60% in a 10 years and yes it is a tower mansion connected to a Terminal station.
   If house you want is detached house then the rule is find a good land that within 15 min walk from a not dead station. House should not be too big, 100m2 house is easy to resell. Building may depreciate on paper, but branded concrete build like Hebel haus is favored even in used.

   If you just want a home, see the land, the neighborhood and imagine your future living there

5. RemindMe! 1 day

6. Personally, as someone with a kid who recently bought a used mansion, if kids are still far off, I might hold off on buying. Or I’d buy, but realize I still might move again. 

   When you have kids, the question of where to live becomes a bit more complicated due to schools, lifestyle change, etc. It’s not even as simple as “have kids, move out to bigger house in the suburbs.” 

   We bought when my kid started first grade. We chose a mansion that was close to desirable train lines for easy transport, within a 10 minute walk of her assigned elementary school (which we had gotten the review/gossip of from friends in the area ahead of time), and still is close to reputable international schools if we decide to change to international schools in the future. I’m not saying that our criteria would be the same as yours, but just pointing out the sort of critical details for me as a parent, which would have been super different in my 20s. 

7. Our house has actually appreciated in value because the area has become more of a tourist destination recently. That said, we’ve also been told that over the next 10+ years it’ll likely start to depreciate as more akiya pop up around the area.

   Realistically, Japan isn’t the best place to expect long-term appreciation on a house unless you’re buying in or near a major city and paying a premium from the start. Personally, I wouldn’t spend more than around $200k USD on a place. A 15–18 year mortgage would go by pretty quickly, and then it’s fully yours.

   Even if resale ends up being difficult, you’d still likely be able to rent it out, so depreciation doesn’t mean the end of the world. In a place like ours with trainees coming to work on local farms, I think there’s a potential windfall there in that dept.

   I think buying our house was one of the best decisions we ever made, personally.

8. We bought our house in December through SBI as the mortgage provider. I’m from the US, so I initially pushed for a fixed interest rate, but my father-in-law (who works at another bank), our realtor, and several other people told us that variable-rate mortgages are much more common in Japan. At the time, the rates they showed us were something like 0.65% variable versus around 2.5% fixed.

   My wife wasn’t completely sure at first, since there’s a pretty common mindset here that renting can make more sense, but I personally wanted that white-picket-fence type of life. I don’t really see the house as an investment — I want to live in it long-term, call it my own, and become part of the local community. We’re out in the Tokyo suburbs.

   I also agreed with some of the comments here: being within about 15 minutes of a station matters a lot, and we learned there are some important tax-related thresholds around 200 m² of land and roughly 120 m² of floor area, so many suburban homes seem designed around staying under those limits.

9. Land appreciates, house depreciates. Especially after 10 or 15 years, which most of the fixtures in the house are rated for, the price starts to tumble because the next owner would have to put in significant work to reform.

10. Having similar thoughts as a family – also from Europe where a house is more of an investment. Not saying that can’t be true in Japan, but there’s a lot more factors involved to have an increase. House needs to be pretty new and in a growing/stable area, close to a station, etc. Friend of mine recently found a house but bank would only lend at 40% of the value because it is over 30 years old, so they are only valuing the land.

    I think it’s only worthwhile if the mortgage payments are around the same level as your rent. Appreciate there’s added costs involved in owning too, but that’s the same with moving house, which you might need to do more regularly as a renter.

11. I actually struggled with the same issue you mentioned so I hope I can be helpful
    – the house value thing: this varies a lot on whether you buy within 23 ku or outside.
    – In pretty much every where else in the world, real estate will appreciate but in Japan, the old and shrinking population also contributes to the lowered real estate price for buildings outside of the metropolitan hubs
    – re depreciation: Japanese laws dictates that a normal wooden kodate has book value for about 20 ish years, and mansion about 40 ish years (many variables). So yes, on paper the building will depreciate down to nothing. Plus side is the amount of asset tax you have to pay will also goes down with it.
    This is an issue if you buy outside of Tokyo, where there will be no buyers and you might be left owning the house forever (paying taxes and maintenance forever)
    If you buy somewhere very attractive then even if the building or room gets older, you can still fetch a high reselling price, even making a profit due to how much property price in Tokyo and 4 main cities have risen recently.

    Now on to the financial side
    – Better location always means much more expensive, but think about what “expensive” would you like to take, a bigger amount of interest payment or the whole house in case you cannot resell.
    – even if interest rate in Japan rises, I don’t think it would be too high, especially if you compared to interest rate in the US, EU or pretty much anywhere else.
    – After a while you can always refinance into fixed interest rates if you really want to

12. I think the bigger question is what problem you’re actually trying to solve. It doesn’t sound like you’ve decided.

    Right now you’re mixing:
    investment return, inflation/debt strategy, lifestyle/family planning, stability, fear of future regret

    Those can point to completely different decisions.
    For example, if your goal is maximizing long-term wealth, renting + continuing to invest abroad has a very decent chance of outperforming buying (rents move slowly here, and tenant protections are great).

    If your goal is long-term family stability and quality of life, then buying a better home/location may be worth it even if it’s not the mathematically optimal investment

    There is no smart decision, it’s just what you’re trying to optimize for.

13. Fixed rate….25 years!

14. Pay cash or at least 50% down payment. You will be safer .

15. I just bought a house in Osaka city and the interest rate is fixed at 0.9%. My mortgage payments will not change for the next 30 years, which might not be the case in renting. Rents are increasing, property value is increasing as well. Sure, the house may not be worth much but the value of the land will rise if you choose the right place. Buying property in a former low class area is a good deal because social status shifts over time and many areas are being gentrified. I pay less for a three floor home in a not so trendy yet nice and convenient neighbourhood than condos with less floor space in trendy areas and it boggles my mind. Bonus: no noises from people upstairs or next door, you can make as much noise in your own home as you want, and you’re free to decorate.

16. i bought a house with hendo interest rate (variable) in yokohama which is very cheap compared to fixed interest rate.
    already in my 7th year it is still the same rate.

    the property price actually increased a-lot this past 3 years, i remember a neighbor same built with my house sold his +1,000万 from the original price already +5yrs used.

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