Looking for opinions.
My family has moved to a small town/city (less than 500,000 people) where extended family is, and I will be moving over there shortly. We don’t know how many years we will stay there.
I personally dislike renting, and always prefer to buy a stand-alone home (not a condo). I have the cash to buy a decent house in this area.
However, my family is telling me that it is really hard to sell property in this town, unless its right by the station. While I’ve always heard that to be the case, I’m confused about one thing: If it truly is that difficult to sell a home, then why are the prices on decent homes still comparable to a small US town? (I’m using [https://suumo.jp/](https://suumo.jp/) ).
For example, 2780万円 for a relatively stylish 178 m2 built 5 years ago. The price seems decent, but if the used house market is really as bad as everyone says, I would expect to see this priced lower.
Of course, there are many old, abandoned homes that are practically free, but I’m not able to consider those.
Personally, I assume that Chinese buyers will eventually make their way to small town Japan and counteract the aging population to start pushing up prices.
What do you think? Is small town real estate totally disconnected from the upward trending prices in urban areas? Will I most definitely lose money if I try to sell the home in 5 years?
12 comments
I’m wondering why aren’t you taking your family at their word.
They live in that town and presumably own property there. Don’t you think they would know what they’re talking about? Particularly since you didn’t give any specifics… How could anyone here speculate anyway?
Likely the reason is more people moving to urban areas and birth rate in decline. Japan won’t open up a lot to immigration so don’t count on more foreign buyers, maybe consider a house near the station? Or accept rent if you don’t see yourself living there for long.
Chinese investors, like most prospective investors will buy into what they think will appreciate/yield enough income to offset the mortgage. A home that is far away from the station in a town of 500k in Japan is a “bad investment”. That house will not appreciate, most houses in Japan don’t. It also won’t get much rental time as there is little to no reason for someone to rent it short term, which is how most investments will yield positive cashflow income.
What your family is telling you is likely accurate. You aren’t going to make money on this property and will likely have a hard time selling it.
How long has it been on the market? Might be the case that sellers are in no rush to lower prices for a quicker sell.
Foreign investors won’t buy in the future cause Japan is viewed as “bad investment”.
I would buy one of the old houses. For that price you could renovate it and have something WAY nicer than a soulless chinese cement tissue box. That’s what I did.
Any house actually made with joinery, and not nailed together sticks will last a lot longer than a cement house, and be very earthquake resilient.
This is mine:
Before
https://imgur.com/a/aWArF8q/
Now
https://imgur.com/a/p3Qk4YH/
The price you are talking about IS low. I have a 64 m² condominium in Tokyo bought 3 years ago for 6400万円, and now it’s worth at least 7500万円 based on sales of other units in my same building. It’s one minute walk from the station and five minutes by subway to Shinjuku.
Believe me, all of my friends including my partner are Chinese, and nobody is interested to buy a place out in the sticks. Rich Chinese want to buy condominiums downtown
28 million for a *178sqm* house (which is gigantic by Japanese standards) built 5 years ago is probably like, what it cost to build the house itself, or maybe even less. In just 5 years the property lost the land’s worth of value. I don’t know why you think it’s not priced low.
Is the town growing or losing people? If the latter, there’s your answer.
Regarding Chinese buyers. They can’t leave China at present (easily at least) and getting their money out is even harder than it used to be, and they can’t enter Japan either (easily).
Why would they be interested in small town Japan? Not much potential airb or rental income and decreasing population and property/land value, what do you think they’d see as being attractive?
I’m a small town in Japan. Bought [this](https://ibb.co/album/HNdvg1) house. 350m2 10ldk. Everything made of hinoki and other amazing woods.
The house is 20 years old and in great condition, lost some value over the years but still wasn’t cheap, if the house is special then it can retain value, not all houses are worthless after 20+ years. The land here isn’t worth much though, so what I paid is pretty much just for the house.
That’s already low
A lot of people are trained to think home values are upheld by market vs demand. This is partially true in Japan but houses’ depreciation will very often outpace demand. So the demand does lie in location.
In a negative light investor behaviors are not the primary justification of whether an estate is a smart choice in inaka.
To gauge what a decent price is try to figure out land value in the area, and get ahold of the cost of renovating and maintenance – that’s your “real” price to pay for many years ahead.
Even a lot of Japanese people underestimate this so research almost never hurts. IMO they say no just because they haven’t done enough research or they think renovating the physical house is outside of their control.
My personal two yen about Chinese investors:
Very few of them are interested in inaka unless they have a relevant business plan in the inaka, that earns more than just collecting rent. For example a hotel, golf or spa in Furano in Hokkaido or manufacturing located somewhere.
Just like most other foreign buyers, Chinese buyers don’t act alone. They use word of mouth, real estate agents, and tax accountants. Rarely do they navigate buying and selling completely on their own, unless they have family here, or have really special interests.
Moving RMB from mainland to Hong Kong is a drastically different scenario from moving Chinese money into Japan…
In cities, if a rich foreign investor can choose between purchasing fewer amounts of expensive rental units, v.s. purchasing many inexpensive units, my bet is that the latter usually appeals to investors, because of the renting condition and ease of scaling. Except for tower mansion penthouses I suppose.