Been looking into ownership and learning a bit about the real estate market here. From my understanding it seems like buying a new house is like buying a new car, the building itself loses value as soon as it’s off the market. Is there often the case then that you’d get stuck in negative equity until then land value eventually appreciates above the loss?
For mansions, it seems like buying new is the better deal as between a 5-10 year period there’s usually some appreciation until it ages out and gets harder to sell.
For used houses, is the value mostly put into the land you’re buying or is it still split 50/50 with the house? I noticed on suumo that there aren’t any houses over 30yrs for sale at the moment.
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>I noticed on suumo that there aren’t any houses over 30yrs for sale at the moment.
This is really going to depend on the specific neighborhood of the city you are interested in. The neighborhood we bought our house in was originally built in the early 1980s, all the houses are now 40+ years old and there are always a few for sale. Maybe the neighborhood you are looking at was built in the late 80’s and early 90s so you only have 30 year old houses there.
Older houses are also often sold as just “land” and not as a “second hand house” so you should check that part of suumo as well.
Depreciation, insurance, risk of quakes.. I would buy instead of renting only as last resort and if I’m sure I’m here for the long run.
The car metaphor is definitely overused. Depreciation is a tax issue and is not necessarily related to the amount a property is sold for.
Some houses and condos may actually gain value when sold, the structure I mean, but the sales price is arbitrarily divided between land and building on a contract; you need not split it 50/50. If there are capital gains on an elegantly renovated property that seem higher relative to the local gains in land prices, you can tweak the ratio to show more value in the building. Or not.
For that reason the statistics of MLIT won’t actually tell you the exact relative value of land and buildings on a single property sold on freehold land.
If you buy a new house, you will pay a new house premium, and then if you sell it a few years later, it will be used, so you won’t be able to get the new house premium – so strictly financially speaking it usually doesn’t make sense to buy a new house.
You also don’t want a super old house, as it will cost a lot in maintenance, etc. 20 – 25 years old is a good sweet spot, but it depends on a lot of factors, including the condition, concrete vs. wood, etc.
If it’s a mansion, you for sure want to check the monthly fees.
Buy something when you are fairly sure you will stay there for 1+ decades. A mortgage is often cheaper than renting a similar place (and something you buy will usually be better quality), but transaction costs and depreciation will sting if you try to buy and sell.