By Aryan Jain

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An idiosyncratic problem has arrived in Japan with the limited lifespan of houses; the average lifespan of a Japanese home is around 20-22 years. After this timespan the majority of houses are knocked down and then replaced. According to the Economist the sales in Japan for new-builds account for around 90% of transactions and 10% fall under the used category. In countries such as the UK and US such figures are entirely reversed with opposing experiences for home buyers.

Figures published by Nomura, a Japanese finance and brokerage firm, show the sheer scale of the issue; the average value of a property depreciates to almost nothing within 22 years post purchase, with value remaining only in the foundation and land thereafter.


There are three main reasons driving this extreme scenario which we’ll explore; tradition, earthquakes and war.


In most countries, people change properties dependant on their stage in the personal life cycle; when they have children they upscale, when they retire they downscale and so on. There is a fundamental difference in Japanese culture in which people tend to stay in the same property throughout their life; this has been attributed to the nature of the country’s history as a farming nation.


Due to the geographical location of Japan, the country is prone to frequent natural disasters such as earthquakes. In response, Japan has adopted more stringent regulations on the building of new homes to withstand earthquakes better. Once these regulations came into force, inhabitants began to preference homes built to meet these specifications, thus favouring new builds predominantly.


War is more of a historical contributing factor to the cultural reasons perpetuating the “20-year-mentality”, World War II left many of the urban landscapes of 20th century Japan destroyed. With a burgeoning post war population, there arose severe strain on existing housing. This led to a drive for the introduction of mass produced new housing. Similar to much of Europe, in Japan this market was capitalised by prefab manufacturers.

Contrary to countries like UK, where the post war boom in building inspired buildings built to last, in Japan a pattern was instilled of ‘short term’ life span housing into buyers. As more of the population cycled through this pattern, the idea of housing for a short period of time became the norm and this led to the expectation of purchasing of a new build home.

These potent triple combination resulted in expectations ingrained within Japanese society of purchasing new, short term buildings which ironically could withstand earthquakes better than traditional or older homes.

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The Vicious cycle

A vicious cycle arises in a society where houses are expected to depreciate with time, which questions the economics of maintaining such a property. Second hand homes often then enter the market often in a derelict state. A pattern of abandoning old homes thus arises. This creates an issue therefore almost unique to Japan, as couple are often tempted to relocate. This has led to Japan, becoming one of the countries with a ‘Low Stationary period’ of the Demographic Transition model, which results consequentially to a declining population. The increase in the number of houses manufactured and a declining population leads to the availability of excess housing and more specifically ‘old and abandoned’ housing.

This not only creates local issues where such abandoned houses predominate but this also applies a downward pressure to the rest of the local housing market. According to some estimates, the number of abandoned Japanese houses is currently around the ten million mark, and is set to reach above twenty million by 2033.

Another casualty of this glut of abandoned houses is the diminished value of one’s own property. This means that the growing elderly cohort struggle to fund nursing homes independently etc. Moreover, if one was to inherit such a property it may be worthless except for the land it was built on, making the transfer of wealth a lot more complicated.

Government Policy and Intervention

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Perhaps expectedly, there was a great deal of involvement from the government in the build-up of this situation. Government policies post-World War II were heavily focused on increasing the supply of homes in the market. Therefore, property taxes, implemented by the government, favoured those who purchase new-build properties over those purchasing older homes. Often the tax for second-hand homes has been five times greater than for a new build.

In recent years, there has been a rethink in housing policies, with government targets set to double the number of used-housing sales by 2020 through facilitating policies introduced in late 2013 that stipulate estate agents are obliged to provide information to prospective buyers on older homes.

Furthermore, in some regions local governments have gone as far as incentivising buyers towards the purchase of abandoned property, in the forms of financial aid and lowered taxation rates.


The Japanese Housing market is skewed towards new build homes and it will take time to correct this and achieve equilibrium between house building and house vacation. Currently, the usage of factors of production to build and destroy homes prevents these factors being employed for more useful purposes. This is detrimental to the long term growth of an economy. It also means lots of goods which have been produced i.e. homes, are not being used to their fullest potential and being allowed to go to waste - something which should be avoided in a sustainable economy.

On the contrary, there is evidence of a shifting perspective both from the people and the government, for example, in 2017, 37 thousand second hand flats were sold in the Tokyo region a 31% increase from ten years prior. While these numbers are quite small and the change in government policy is just embedding in, the so called “20-year mentality” regarding the housing market remains strong.