Purchased New House In Japan
 

Great news, last week my Japanese wife and I purchased a house in Yamagata, Takahata-machi. This will be our retirement home and plans are being made now to ship our house hold goods. Good things come to those who plan, prepare, and wait. Life is good...

Wonderful! Guaranteed peace and quiet, yet even with a Shinkansen station, yeh? Hope you have loads of fun there.

Just curious...is it a New House or just a New House to you?

Its a new house to us. We purchased a used home to keep the taxes low.

I thought taxes were higher on used homes...that's why people tear down perfectly good homes and build new ones.

5 out of 6 homes bought in the US are used.

5 out of 6 homes bought in Japan are brand new.

You`re right, MMM. Taxes are higher for used homes all but the first year or two - and the additional fees and higher interest for loans on used homes make up for that by far. We looked into buying a used house, and for one priced the same as the new place we bought - over the length of the loan we`d have been paying 25% more. We went with a new place.

Unfortunately, this is what my neighbors say. A few even wish they didn't have to build new homes, but it just isn't cost-effective to do otherwise.

Why is that? Seems rather backwards to my mind.

That`s because it is generally the other way around in other countries...

In Japan, the value of a place is determined by the value of the land - not by the building. Of course, the building adds to the value of the land for the first so many years, but after a certain point will actually reduce the value of the land. This is similar to a nice garden adding to the value of a house, but a lawn full of unkempt weeds subtracting from it.

The biggest difference in end cost though is the difference in interest rates, fees, and the lack of benefits from the government that you get with a new house. As the majority of "used houses" sold are land sold for reconstruction (that just happen to have an old house on top) you can`t get any of the benefits that you would with buying or building a house.

With a new house, for the first 5 to 10 years you only have to pay a certain percentage of the property taxes. This is huge as yearly property taxes are something like 20~30万. They are calculated by the value of the land and the size and construction materials used for the building standing on it. The age of the building doesn`t matter, so buying a used building won`t change anything (although wooden buildings are cheaper than the steel and concrete used in most now...)
You cannot apply for the ultra-low-interest housing loan from the government (usually used for 30 to 50% of the property cost with virtually no interest), and the loans offered by banks are for "multi-purpose land" and not for a residence - so instead of a normal housing loan, you get something close to a business loan that has a completely different set of interest rates and the like.

When we bought this place new, the housing loan we got was 2.2% interest (since refinanced to 1.6%). To buy the used place we were looking at for the same price, the loan would have been 5.4% interest. Plus we`d have needed to pay the full property tax from day one (260,000) along with paying for all the change of hands fees out of pocket, no warranty on anything in the building (our new building has a warranty on all parts - some have expired, some last another 20 years), calculate in necessary repairs, having all pipes and wiring checked, etc etc.... And it would have been much much more expensive to buy somewhere "used".

Thanks for explaining it. I mean, in some ways it makes sense now, but it still seems a bit of a shame to be ripping down perfectly good housing and going through all the procedure of building a-new just to beat the paperwork.