New calculations show that long-abandoned homes in Japan are lowering the values of surrounding properties, with losses reaching $ US24.7 billion over the five years through 2023.
The large sum underscores the scale of a problem fuelling a vicious cycle of plummeting prices and more unsold properties. All this is ahead of the World Expo 2025, held in Osaka over six months, from April 13 to October 13, and will carry the theme ‘Designing Future Society for our Lives’.
The latest data compiled by the Japan Akiya Consortium, which brings together 14 companies and a research institution to tackle the problem of abandoned homes, are based on 2023 government statistics and research by the Centre for Real Estate Innovation at the University of Tokyo.
The number of abandoned homes that are not for sale or available for rent but have remained empty for a long period of time increased by around 360,000 units between 2018 and 2023 to about 3.85 million units reports the Japan-based trade news platform, Nikkei Asia.
More than 70% of these were detached, single-family houses…
The consortium’s research found that land prices within a 50-metre radius of abandoned homes were on a downward trend in many cases. Potential causes include a decrease in the number of people looking to move in due to concerns about vegetation overgrowth, pests, and public safety.
An estimated 80% of the single-family houses that became abandoned in the five years through 2023 brought down the values of surrounding properties by about $ US25 billion.
While the Ministry of Land, Infrastructure, Transport and Tourism said that residential land prices rose for three consecutive years until 2024, abandoned houses may have suppressed the rate of that increase.
“Our estimate was limited to the impact of abandoned single-family houses on land prices,” said Teppei Kawaguchi, CEO of Crassone, a construction and demolition services company that leads the consortium. “The actual negative impact may be even greater.”
In the case of abandoned condos, which were not included in the estimate, missing owners can delay management and repair fee payments, bringing down the asset value of an entire building.
“There is great concern that losses will increase exponentially in the future,” said Takeshi Ide, CEO of Tokyo Kantei, a real estate company based in the capital. In areas where abandoned houses are on the rise, many elderly people live alone, increasing the chances of their homes becoming abandoned in the future.
“Those homes will also become abandoned after the owner’s death if nobody inherits them, and land price losses may snowball,” Mr Ide said.
Even though the population is decreasing in Japan, the number of households has continued to increase due to more people living alone.
According to estimates by the National Institute of Population and Social Security Research, it is expected to peak in 2030. The total demand for housing will begin to decrease in earnest after that, which could accelerate the growth in abandoned homes.
The government has taken legal measures to deal with the issue, such as making inheritance registration mandatory: “When the number of households also starts decreasing, there will be limits to responses to individual vacant homes,” Mr Ide said.
Meanwhile, foreigners are snapping up old and abandoned houses – and about eight million of them across Japan – at low prices, setting up hotels or renting them cheaply, freeing them from pricey real estate elsewhere.
Meanwhile, the World Expo 2025, which is due to open in just over a year, has been beset by major construction delays. These delays reflect structural problems such as growing labour shortages and overtime restrictions that will plague the world’s fourth-biggest economy for years to come.
Although organisers say the event will take place as planned, looming over this are political and business infighting, ballooning costs — more than US $1.5 billion and counting — and questioning its purpose in the modern era that has left citizens scratching their heads.
Encouraging, but not a problem fix for Japan’s housing woes, is a surge in demand for high-rise timber buildings. Late last year, Wood Central reported that planning officials received 36 applications for mid-rise or high-rise timber structures for 2022/23, more than double the previous year.
