Tokyo and tech through the eyes of a split pea

Build over buy

Glocom has a great opinion essay by Haruo Shimada (Professor, Keio University) on how reforming the housing market is a key component to Japan’s economic recovery. One fantastic point in particular:

The fact is that a house is not an asset with durable value in Japan, and this is the real cause of the slow recovery of personal expenditure. People know there is virtually no value in their houses after 20 to 30 years of purchase, and are neither salable nor rentable, and this is causing the anxiety.

…

This is the reason for Japanese people to build up seemingly huge savings, as owning a house would only have value as a living space for the present owner, and that cannot be considered a significant asset.

I would rarely confidently respond on the question on why the Japanese have some of the largest savings when there’s also so much consumerism and the cost of living seems to so high. Where does all the money come from?! An average income of 8 million yen [$72,000] might be part of it. However, this “extra burden” to stockpile monetary assets seems to make more sense, especially observing the U.S. market which is “Still Solid, but Creaking a Little”.

But I have doubts on how quickly this reform can be implemented. Obvious opponents will be from the construction sector, who have strong ties to the government and “underground”. It’s amazing how many dilapidated buildings dot the Tokyo landscape because of sketchy mafioso dealings and owners mired in debt. It takes a unique individual to handle negotiations between such groups; in fact, if you don’t know the right people, someone whose job it is to iron out these wrinkles, it can be impossible to buy the property you want. The government is always useless in these cases.

Update: Whoops — forgot the actual link :) here.

Posted on Tuesday, October 21st, 2003 at 2:23 pm and filed under Japan, biznomics, salaryman, tokyo life. Subscribe to RSS 2.0. Skip to the end and leave a comment. Pinging disabled.