Good intentions gone wrong: Surplus of vacant houses

Photo credit to: https://www.japantimes.co.jp

A recent government survey revealed that the vacant residences in Japan hit a record high of 13.6 percent as of October 1, 2018. In addition, a survey by the Ministry of Internal Affairs revealed an increase in the approximate number of empty houses to a record 8.46 million units. According to news reports, the total number of housing units in Japan increased by 1.79 million while the number of unoccupied houses rose by 260,000 when compared to the survey conducted in 2013.

 

As Japan sees a continuous decline to its population for the last few consecutive years, this may easily be seen as the root cause for the increasing number of idle houses all over the different areas of the country. However, a look back on the history of this super aging country shows many various factors that have played a part to this rising problem.

 

This steady increase in the number of unused houses reportedly began during the period of strong economic growth following the end of World War II. At that time, the government of Japan had two major issues to deal with: the first was the population increase and the second pertained to the post-war housing shortage. To address these concerns, the government enacted laws and implemented measures to encourage residential development throughout the country.

 

The agency precursor to the current Japan Housing Finance Agency provided a sure-fire two-step method to encourage housing constructions that is, low interest loans and tax deductions/reductions. This gave potential investors an idea of quickly constructing houses on empty lands knowing that the value of the property will increase as the residential sector develops. As a result, massive waves of houses were built without any emphasis on long-term use. This left Japan with a number of mediocre-quality houses that remained idle and had little to no resale value. Consequently, the sale of pre-owned houses was said to represent a very low 15% of the total housing transactions in Japan.

 


In addition to the apparent difficulty of selling these idle houses, dilapidated ones were not demolished to avoid an increase in real property taxes. This is due to the Japanese taxation system which reportedly taxed empty lands at a rate of 6 times more when compared to lands with houses, even those that are in disrepair.

 

Reference:

Home Vacancy Rate Hits Record High in Japan

Empty Homes: A Growing Problem for a Shrinking Nation

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