2019 Japanese Real Estate Forecast: Reading the Fortune of the Market
There are no "definite answers," but I would like to take the time to make my predictions.
In a nutshell, I predict that the real estate prices in major urban centers of Tokyo and Osaka, areas surrounding Shinkansen stations, and a few special case rural locations will see slight increases from recent plateaus while all other areas will experience light drops.
Since it's unlikely that the majority of international investors will be looking for "rural investment projects", let me focus on the major areas.
First, to talk about the things that have improved, in Japan it was believed that there was a risk of collapse due to the "2019 Problem."
There are two reasons for this:
① Previously an official research organization had announced that the number of households in Japan would reach
its peak in 2019 due to the rapidly aging population and low birth rate.
② According to the Japanese capital gain tax, in most situations the tax rate drops after 5 years.
Since the Tokyo Olympics were announced in September 2013, there is the risk that a number of investors purchased property for short-term gains and will sell them as soon as possible. (In actuality, in the past 6 years, real estate prices have seen significant gains in the 23 wards of Tokyo, so property purchased at the time should have seen capital gains.)
For ①, there was a new statistic released this year that show that Japan had reached its peak in 2013, and not 2019 as previously believed. Therefore, the risk as outlined in ① has become insignificant.
For ②, the investors other than those who had gone with the predictions for the 2019 Problem and sold their property to ensure their gains are most likely waiting to see what is going to happen. As long as there is no collapse in the Japanese or world economies and no major inflation of the yen, I don't see any reason for international investors to sell either. Cities in developed countries which hosted the summer Olympics in the past did not experience large declines in real estate prices directly before and after the Olympics.
There are a few other reasons.
The situation will become difficult to read if the trade relationship between the United States and China deteriorates, Japanese exports slow, and the Japanese economy cannot be deemed "positive."
In any case, it's helpful in your decision buy or sell to check the Japanese investors who are most informed on economic affairs and understand trends.
We will keep you informed of any other movements with Japanese investors.
By Koji Ishida (LIFULL Co., Ltd. International Investments Group Leader)
With over 20 years of experience, Koji Ishida has worked in numerous areas of the real estate market from major developers to real estate consulting. He has been featured on several television programs to showcase his knowledge and understanding of the inner workings of the market.
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