A Comprehensive Look at Why Houses in Japan Are So Affordable
In 2019, I bought a two-bedroom house in Japan for only $36,000 (the actual house I bought is pictured above in the title image). This number includes all real estate fees and taxes.
At that same time, the average home price in my home country of Canada was $565,800. That’s nearly 16 times higher than how much I spent!
You may be wondering how I pulled this off, whether this was an exception to the rule—after all, many people think of Japan as an expensive country. But as you might have guessed from the very name of my site, affordable houses are common in Japan.
A question I often hear is “Can foreigners buy houses in Japan?” and the answer is yes! With a few exceptions, international buyers can and do buy houses in Japan – some to spend more time in the country, some find ways to move here permanently.
At first glance it all might sound too good to be true. This article aims to set the record straight on cheap houses in Japan: what we mean by “cheap,” why houses are so affordable, what you can expect to find at lower prices, and the challenges (as well as the opportunities) that may present themselves should you decide to buy.
What Is the Housing Market Like in Japan?
Property market trends in Japan are in some ways very different to that of other developed countries like the States. The overwhelming preference for house buyers in Japan over the last several decades has been for new construction.
In fact, freestanding homes are expected to fully depreciate within 30 years, with the assumption that the house will be demolished when the owner is gone.
I’ve always said buying a house in Japan should be viewed as a lifestyle investment rather than a financial investment.
You may also like my e-book: How to Buy a House in Japan
The short lifespan of houses in Japan is also informed by the historic background of housing practices, when houses were seen as temporary huts, built for very basic shelter purposes and intended to last only a few years.
This “scrap-and-build” cycle continued through the post-war period when the quality of housing continued to prioritize efficiency over quality. Traditionally, houses were made of materials such as wood, clay and paper – houses were built to deteriorate gracefully. While modern houses are no longer made fully from natural materials, they are still assumed to have a short lifespan.
Due to factors like these, housing continues to be treated as disposable. Meanwhile, new residential construction per capita has ballooned to levels much higher than other countries (and almost twice that of the US in recent times).
The impact of inflation (and therefore the cost of construction and labor) in recent years is starting to be felt among buyers, which has eased the trend for new builds.
But despite the market for second hand houses still remaining a small fraction of the total (just 15% of housing transactions in 2018 vs. 81% in the States), demand for used homes has been rising, evidenced by the sales index for second hand houses reaching the highest level for the past decade in 2023.
This is another, though perhaps lesser, reason why it is especially timely to take advantage of market conditions if you do wish to purchase a second-hand home in Japan.The persistently weak yen against other major currencies is a very compelling reason to act quickly.
See also: How to Retire in Japan as a Foreigner
Why Are There So Many Cheap Houses in Japan?
Perhaps another useful question is, why are there so many empty houses in Japan?
Japan is facing Depopulation and Demographic Changes
It is expected by 2050 that about a third of the population will be over 65. Japan’s declining birth rate, and consequent depopulation of small rural towns has been the subject of many international news stories.
Together with the preference for new builds and lack of incentives to renovate older houses (especially considering updates to earthquake safety standards), this has exacerbated the problem of abandoned houses, called akiya in Japanese.
Recommended viewing: the Scarecrows of Nagoro in Shikoku
Japan’s Akiya Challenge
In 2023, a record 9 million homes stood empty across the country. Indeed, most of these homes are in lesser populated regions, like Wakayama and Tokushima prefectures (accounting for about 20% each of the total).
Local municipalities have set up so-called akiya banks, to save the effort of surviving heirs who have often relocated to the cities to offload the property onto someone else, by making the empty homes discoverable for house-hunters. These akiya may be offered for very little (several hundred or thousand dollars equivalent) or occasionally for free.
For more details on how akiya banks work: Should You Buy an Akiya?
Government Interventions Have Been Minimal
The Japanese government has been slowly rolling out measures to address rural depopulation, and by extension, find new tenants and owners for some of these empty homes.
For example, an incentive scheme was launched in 2023 offering 1 million yen to Tokyo families to relocate to designated rural locations (contingent on also being in employment, or starting a business in the location they move to).
Additionally, akiya laws were revised in late 2023 to exclude vacant houses from tax-exemption if they had fallen into disrepair. Critics say this simply doesn’t go far enough to slow what remains an accelerating trend.
If you are keen to pick up a second hand home or even an akiya, there are some renovation subsidies depending on the municipality that you may be able to take advantage of as a foreign resident of Japan.
What Are These Cheap Houses Really Like?
Since the average life of a house in Japan is considered to be 30 years, it’s perfectly possible to find second hand homes that are in nearly-new condition for well under $150k, especially in non-central locations.
How much is a house in Japan’s countryside? Houses that appear to be in reasonable condition, needing only manageable updates, will run anywhere from $10,000 to upwards of $100,000 in rural Japan.
If you see a beautiful house for cheap and wonder, “Why are houses in Japan so cheap,” the first thing I’d direct you to look at is the location. The cheapest houses will often be in the least convenient locations. Many factors including proximity to amenities (such as stores and train stations), size, year built, and condition will influence the price.
In my house, I decided to replace the aging tatami mats and fusuma with fresh ones at a cost of $1500. Since my home was built in the early 80s and had been recently renovated, it turned out to need very minimal updating.
Traditional properties including machiya townhouses (see this tour of a typical townhouse in Kyoto, called kyomachiya) and kominka farmhouses are typically made of natural materials. They are beautiful, but prone to wear and tear. Those who prefer a fresh space will likely want to renovate.
These old houses make up a significant proportion of the houses available at the lower price end, particularly those in the countryside, and those listed on akiya banks.
Benefits of buying a house in Japan
Authentic Vacation Experiences
Purchasing a second home in Japan as a non-resident foreigner can be a great way to “live like a local” during your vacations, and avoid the skyrocketing costs of accommodation during shorter visits to the country. It’s a good time to find your Japan vacation home while the exchange rate is still weak.
Potential visa track
For those dreaming of being able to relocate to Japan more permanently, purchasing property is not a direct route to residency but may aid the process in more indirect ways.
With the inbound tourism boom and a newfound appreciation of older heritage properties, there are certainly opportunities for starting businesses in the hospitality sector, including guesthouses, eateries and more.
Becoming a business owner in Japan and qualifying for the business manager visa is not all plain sailing, but local authorities are starting to encourage these initiatives by way of the new start-up visa and advisory services to entrepreneurs.
Potential to Rent Out a House in Japan as a Short-Term Rental
If you are not planning to live in Japan full-time and want to make rental income, there are more and more agencies popping up that offer vacation home management services, like this one in Kyoto that specializes in traditional homes (and they offer services in English).
Access to Renovation Subsidies and Grants
Renovation may well be necessary to make the property liveable or comfortable but government funds are available (with a preference for young families) to provide financial assistance to those seeking to renovate second hand homes. The vast majority of these are expected to be available only to foreigners with residency (despite that non-residents are able to purchase houses in Japan).
On a national level, the government is offering funds to improve the energy efficiency of older homes through November 2024 (for example, you can claim up to 4 million yen for an entire outer wall replacement, with new windows, insulation panels and air conditioning).
As an example of a city-level initiative, Kyoto City, in an attempt to stall the migration of young people to neighboring prefectures, is currently offering up to 2 million yen to families looking to buy and renovate an existing home until 2025 (with additional funds available to larger families and those purchasing a kyo-machiya traditional townhouse, that may require more complex renovations).
Similar schemes exist across the country (sorry! Japanese language only).
What Are the Disadvantages and Risks of Buying a Cheap House in Japan?
Lack of Financing Options
If you are a non-resident of Japan, one big barrier many face is that you will most likely have to pay cash for a property here. Most banks (even the branches of international ones) don’t offer loans to non-residents.
Potential Need for Renovations
Regarding renovations: While not necessarily a disadvantage, an important consideration when purchasing a house in Japan is adherence to the earthquake proofing standards.
Major construction laws were revised in June 1981 to increase earthquake safety measures. Houses build before this may be expected to have earthquake resistance up to about magnitude 5, whereas those that received certification after this date are expected to withstand larger earthquakes of around magnitude 7. An additional revision in 2000 improved this further.
This subject has become especially topical again since the devastating earthquake in the Noto Peninsula on New Year’s Day 2024 which destroyed half of all the buildings that were built under the pre-1981 standards.
If you are keen to keep renovations to a minimum, you will want to restrict your search to houses built after 1981.
For these reasons—as I discuss in my guide—having an independent housing inspection is recommended. While it can cost upwards of $500 to $1000, it could save you a lot of pain, money and time! The guide also introduces the benefits of hiring an intermediary (especially if you aren’t yet fluent in Japanese). Intermediaries can assist with your house purchase, organize due-diligence and facilitate negotiations.
If you would like to hire a building inspector directly, here is a directory of inspectors: Japanese Society of Home Inspectors website (in Japanese only).
There are definitely some affordable houses in Japan with an extremely low price-tag ($5000, $500, or even free), but the amount of renovation needed to make the home safe and livable often make them a poor choice.
Real also: Should you Buy a House in Japan for $500?
Housing in Japan Can Be Incredibly Affordable, but It’s Important to Manage Expectations
It’s easy to get excited about the prospect of owning a house in Japan at bargain prices, while still maintaining high living standards.
Having laid out the reasons behind why there is a large supply of cheap second hand houses in Japan, you should now have a better idea of what this really entails. Consider whether it is still an attractive option in the long run, especially when Japanese houses lose value over time.
As a former resident who now primarily lives outside of Japan, I certainly have no regrets about my vacation home purchase. It enables me to maintain my connections to a country that I love and enjoy spending time in.
If you are interested to see cheap houses in Japan for sale, sign up to the Cheap Houses Japan newsletter to receive 20 real estate listings (up to $150k) every week, plus 3 months of back-listings. My comprehensive e-guide, How to Buy a House in Japan, is completely free when you sign up for an annual subscription.
