Japan’s housing market fell in the early 1990s, contributing to the prolonged recession called the “Lost Deduction”. However, since then, real estate prices have remained outrageously high.
Prices in Japan
Real estate prices in Japan are high if the 100-year mortgage terms are ordinary. These multigenerational mortgages are indicators of what foreigners should be prepared for if they want to enter the Japanese real estate market. There is no law restricting the purchase of property by foreigners – the market climate and procedures do it on their own.
Foreigners must be permanent residents to apply for loans from Japanese banks and even then they will have to present a financial guarantor. Japanese banks are still traumatized by the Lost Decade (and the recent recession), so these require detailed financial references and records with loan applications. Foreigners who do not have a long-standing relationship with a Japanese bank will find it almost impossible to get a loan.
Finally, the ill-health of the Japanese housing market over the last twenty years makes the long-term investment at best discouraged. All this explains why most Japanese families also want to rent their homes!
Where to find a property in Japan?
If you really have the financial means to buy in real estate in Japan, you can look in real estate directories available in bookstores and newsstands, or contact a local real estate agent. You could also consider consulting a large real estate agency such as Century 21 Sankei to find a suitable property.
The formalities to buy or rent a flat or a house in Japan
The costs for housing are extremely high and include:
– the Shikkin, a deposit refunded in part at the end of the lease and which corresponds to approximately 2 months rent.
– the Reikin, a “gift” that is made to the owner before moving. The amount usually amounts to 2 months rent.
– Chukai ryôkin or tesuryô which corresponds to the expenses of agency, about 1 month of rent.
– The first month of rent before moving in.
In summary, be prepared to pay about the equivalent of 6 months rent, three of which will not be refunded!
For the purchase of real estate, there are different cases depending if you are an individual, married to a Japanese person, already residing in Japan with a job, etc…