Japan Flag

Japan: Overview

In Depth

Find Property

Directory

Global Statistics

Regional Statistics


Last Updated: Oct 22, 2009

House price falls in Japan accelerate

Seriously affected by the global financial crisis, falls in Japan’s residential property prices accelerated during the first half of 2009.

The urban land price in Japan’s six largest cities dropped by 7.8% (9.2% in real terms) in H1 2009 from the previous year, according to the Japan Real Estate Institute (JREI), ending the long-anticipated recovery of Japanese property prices.

In Japan, land prices serve as a proxy for home prices. Land prices in the six largest cities rose by 2.8% (2.8% in real terms) in 2006, 8.1% (8.1% in real terms) in 2007, and 1.1% (a fall of 0.2% in real terms) in 2008.

On a national level the price of land has been falling since the H2 1991. Since the second half of 2007, land price decreases in Japan have accelerated. Land prices slid 3.4% (4.9% in real terms) in H1 2009 from the previous year.

There are no legal restrictions on foreigners owning real estate property in Japan.

Read Price History  »

RENTAL YIELDS

Last Updated: Apr 13, 2009

Expensive apartments, moderate returns

The gross rental returns on apartments in Tokyo, Japan, averages around 5.54%. Smaller units have the highest yields. A 40 square metre (sq. m) apartment generates a yield of 5.90% while a 250-sq. m apartment has lower returns, at 5.21%.

Due to a lack of space in overpopulated Tokyo, apartments in the city centre have always been very expensive. On the average, apartments sell for around US$13,328 per sq. m.

Read Rental Yields  »

TAXES AND COSTS

Last Updated: Dec 10, 2008

Effective rental income tax is low in Japan

Rental Income: Rental income of non-resident individuals is subject to 10% tax. However, effective rental income tax is low, ranging from 3.4% to 5.9%.

Capital Gains: Net gains realized from selling short-term real properties, i.e. property held for less than 5 years, are taxed at 30%. Net gains on property held beyond five years are taxed at 15%.

Inheritance: Inheritance is based on residency status but foreign individuals inheriting property located in Japan are still subject to inheritance tax, which is levied at progressive rates.

Residents: A permanent resident is taxed on his worldwide income at progressive rates.

Read Taxes and Costs  »

BUYING GUIDE

Last Updated: Aug 16, 2007

Moderate roundtrip buying costs in Japan

The total roundtrip transaction cost is around 6% to 10%, inclusive of the 3.15% agent’s fee (inc. VAT and local taxes) plus an additional payment of ¥63,000 (US$526). The Acquisition Tax differs for land and buildings at 1.5% and 3%, respectively.

Read Buying Guide  »

LANDLORD AND TENANT

Last Updated: Jun 21, 2006

Japanese landlords get key money

Tenancy laws passed in 2000 shifted the balance of power from tenants to landlords, making Japan strongly pro-landlord.

Rents: Rents are freely negotiable. Aside from two to three month’s security deposit, landlords receive key money worth one to two month’s rent.

Tenant Eviction: Automatic renewals of leases were abolished in 2000, making eviction easier. If the tenant prematurely ends the contract the landlord can charge one month’s rent.

Read Landlord and Tenant  »

ECONOMIC GROWTH

Last Updated: Oct 22, 2009

Fragile political and economic environment

After four consecutive quarters of recession, the economy grew by 2.3% in Q2 2009 from the previous quarter. The recovery is due to three stimulus packages announced by the previous Liberal Democratic government of PM Taro Aso announced in the second half of 2008.

Public investment increased by 33.6% in Q2 2009 from the previous quarter. Foreign demand returned as exports increased by 28.1% in Q2 2009 from the previous year, following the 63.9% plunge in exports in Q1 2009.

The economy is not yet safe from any future downturn. Private investment and private demand have continued to fall in Q2 2009.. Deflation in Japan has accelerated to 2.2% in August 2009, while in July 2009 unemployment rose to 5.7%.

Though a JPY15.4 trillion (USD173 billion) stimulus package was announced in April 2009, the victory of the Democratic Party in the August 2009 national elections casts doubt on the package’s implementation, as the Democratic Party wants a clean break with the infrastructure-spending led spending policies of the Liberal Democratic Party (LDP), which ruled Japan for 50 years.

 

  • Strongly pro-landlord system
  • Low to moderate transaction costs
  • Strong rental market in Tokyo
  • Stable political system
  • Low effective rental income tax
  • Economic malaise for 10+ yrs

RESIDENTIAL PROPERTY FACTS
Price (sq.m): $13,814 For a 120 sq. m. property, usually an apartment. Rental Yield: 5.69% For a 120 sq. m. property, usually an apartment.
Rent/month: $7,854 For a 120 sq. m. property. Income Tax: 3.40% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 8.5% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 4.0% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord & Tenant Law: Strongly Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

Subscribe to our Newsletter!

Enter your email address to sign up.