Why Does Japan Have So Many Empty Houses? — Taking Advantage of Akiya

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Have you ever wanted to live in a Japanese ghost house? No, it isn’t something from a horror movie. It’s your chance to buy a home for next to nothing.

Akiya is the Japanese phenomenon of empty houses. There is an ever-increasing number of abandoned homes in the country. This creates a real estate situation that you can benefit from. Check it out.

Even if you don’t want an akiya ghost house, you can still invest in Japanese real estate. Here you can learn the details of the market.

Why Does Japan Have So Many Empty Houses? — Taking Advantage of Akiya

Why All the Abandoned Houses?

Japan has an epidemic of abandoned houses, also known as akiya (空き家). It’s not the only country with this problem, but it’s arguably the worst. Empty houses may seem like a strange phenomenon for a developed country like Japan that has the world’s third-largest economy, but there are several factors at play.

An Aging and Shrinking Population

Perhaps the biggest reason Japan is full of empty and abandoned houses is that the population is shrinking. Japanese people in general don’t have very many kids. There was a baby boom in Japan after World War II, but the birthrate quickly declined until in 2011 the population actually began to shrink. 

Right now, Japan has around 127 million people, but it’s expected that by 2050, there will only be 97 million. That’s almost a quarter fewer. The birth rate has been too low to replace the population since 1974 and was about 1.41 children per woman in 2016.

Why Does Japan Have So Many Empty Houses? — Taking Advantage of Akiya

This low birth rate combined with Japan’s technologically advanced economy also means that the population is getting older. Thanks to great nutrition and health care, Japan has the highest life expectancy in the world at over 85 years old.  As the baby boom has gotten older but not had any kids, the average age increases. A quarter of Japan’s population is over 65, and that’s expected to be a third by 2050.

Well, you can probably see why a shrinking population is going to mean empty houses. They just aren’t needed. People die, and there’s no one else to move in. And an older population means that’s happening more often. Plus, elderly people sometimes can no longer live independently and have to move in with family, which is very common in Japan. Then their houses are empty.

Why Does Japan Have So Many Empty Houses? — Taking Advantage of Akiya

Urbanization

On top of the aging, shrinking population, Japan is also heavily urbanized and getting more so all the time. In the 1960s, less than 65% of Japanese people lived in cities. Now it’s over 90%. As people gravitate towards the cities, there’s no one left to fill old country homes.

A lot of the time, it’s younger generations who move to the city. When their elderly relatives pass away, they might inherit the houses, but they simply don’t want them. They have their own life in the city, and the property tax is too high. If they never claim the house, though, they don’t have to pay it. And that’s how you get a slew of abandoned houses. 

Why Does Japan Have So Many Empty Houses? — Taking Advantage of Akiya

How to Get a Free House in Japan

So what does Japan do with all these empty abandoned houses? Well, in many cases, small towns are actually giving them away for free. As the population of the country drops and people leave small towns for the city, this is a way to attract residents and revitalize their communities.

These towns normally collect a list of the vacant houses in a bank, known as an akiya bank. Each town has a different process for listing the houses and taking applicants, and since these are usually very small towns in rural areas, it can be difficult to navigate.

The local governments have the goal of revitalizing the town, so they usually have stipulations. For example, many will only give homes to young families. The parents must be under a certain age and have children still in school. You also normally have to prove you will work and live in the town indefinitely as well as provide a plan to reform the house.

Additionally, there are plenty of fees that make it not exactly “free.” These include filing and transfer fees and property taxes. Sometimes there may also be a relatively low “rent” you have to pay for a predetermined probationary amount of time before the house is truly yours. Still, even if these add up to a few thousand dollars, you’re getting a pretty good deal.

Now that you know all the catches, do you still want a free akiya? Okay, well the banks are mostly handled by the local governments, so this can be a bit tricky. Plus, they’re almost all exclusively in Japanese.

Luckily, there’s at least one website that aggregates all the various banks all over the country. They even list a lot of them themselves. It’s only in Japanese, though.

You can also try with real estate agents. Sometimes, even large agencies in big cities might have akiya listings. A better bet is to find agencies in prefectures you’re interested in. They’re very likely to have akiya listings or at least to be able to point in the direction of the bank.

Why Does Japan Have So Many Empty Houses? — Taking Advantage of Akiya

Buying a House in Japan

If you don’t qualify for an akiya transfer, there are still options for getting the Japanese country home retreat you’ve always wanted. The same demographic changes in Japan like the shrinking and aging population and urbanization mean that, on top of abandoned, free akiya, many country homes are relatively cheap compared to your home country. Often, these are ready to move into and don’t need any reformation.

Also, unlike a lot of countries that have barriers that prevent foreigners from buying property, you can buy a house in Japan even without a residence permit or visa. The only stipulation is that you must notify the government, specifically the Bank of Japan, within 20 days of buying a house.

Still, purchasing property in a foreign country can be complicated. Your main concern will be taxes and fees. Things like property taxes may be completely different than in your home country. 

The mortgage and lending process may also be a lot different. Many Japanese banks will give home loans to foreigners, but it’s not an easy process. Most lenders want to make sure the foreigner has the means to pay the loan and isn’t just going to skip out. It can be hard to hold foreigners accountable. This is often done with high down payments, usually at least 20%.

Why Does Japan Have So Many Empty Houses? — Taking Advantage of Akiya

Why are houses in Japan so cheap?

Many foreigners are surprised by house prices in Japan. Japan can be an expensive country, so the relative affordability of houses seems strange. The primary reasons for this are the same as the akiya phenomenon. Japan has more houses than it does people, certainly young people looking to buy.

Of course, if you remember, a big factor in Japan’s empty house problem is urbanization. A lot of people are moving to the city. As a result, the really cheap houses are in the countryside, but even urban houses are relatively affordable. It’s mainly Tokyo where you will find super-expensive homes. The next two most expensive cities, Kyoto and Osaka are more affordable.

Talking about the affordability of houses is complicated, though. There’s a lot to take into account. For example, though Kyoto might be cheaper than Tokyo, you might make more money in Tokyo. Plus, location will make a big difference even within the city. Houses close to train stations go for more than those in unpopular neighborhoods, for example.

Regardless of where you’re looking, it’s important to know your budget. Specifically, you shouldn’t buy a house that’s going to cost you more than 25% of your monthly income in mortgage payments. This isn’t just because it’s good financial sense. Japanese banks usually won’t give a loan for more. And don’t forget the minimum 20% down payment.

Why Does Japan Have So Many Empty Houses? — Taking Advantage of Akiya

Know what you’re getting into

The idea of a free house can be tantalizing. But if you’ve paid attention, you know nothing is really free. There are taxes and fees and plenty of catches. If Japan is a foreign country for you, you need to be sure you have all the info.

Perhaps most importantly, you should know enough Japanese language to understand the fine print. Consider studying up before becoming a home buyer.

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