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Buying property in Japan: good idea?

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  1. #1

    Buying property in Japan: good idea?

    I am looking at the property market in Japan, and clearly one can get much higher yields than in HK, although mortgages are very difficult to get (so one needs to pay for the whole property upfront).

    I know someone I trust who can help manage my property. I trust Japanese people to work hard and be honest, so I feel more comfortable investing in Japan than for example in the Philippines and Thailand.

    My concern is the public debt. 250% of gdp and growing steadily?!?!?!? That's double than even Italy and USA, and it has grown x 10 over the last 25 years?!?!?!? http://alphapatriot.com/wp-content/u...hn-Mauldin.jpg

    I can't see them solving the problem of public debt, but what will happen to the currency and housing market? What they might do is to default on their debt and have a new currency, called the Kico. Houses will be traded in Kicos and you can sell Kicos to buy HK$. The net outcome, after a year of confusion and uncertainties, might be that nothing much changes.

    I don't find prices in Japan overly high, so I don't think there will be massive devaluation of the currency, or loss of value of housing. Japan is still an exporter, although 20% of the products it produces are exported to China, and the two don't like each other. Also, the trade balance is deteriorating: Japan’s record trade deficit raises fresh doubts about Abenomics - FT.com

    So I ask the economists out there: what is to be be expected in terms of the exchange rate between Yen and Euros or US$? Will the value of the Yen drop? Over the last 18 years it has gone up and down, but there hasn't really been any clear trend: JPY/USD Currency Conversion Chart - Yahoo! Finance . Japan is still a strong industrial country, so what can one expect? Resilience or recovery, or disaster?

    And what does you think will happen to the value of housing in Japan (in the city centres, not the countryside!)?

    Overall not a very positive situation, and I don't see a plan to change (apart from Abenomics), but on the positive side a well educated and hard working workforce. Japan will never be Zimbabwe, but of course a loss of value of 50% will make the investment not worth making.

    Any thoughts?

    Queenieshanix likes this.

  2. #2

    Thank you. Which bank offered you the mortgage? You can pm me if you don't want to post it here.


  3. #3

    Thanks. I will contact them. Though I am not planning to buy a property for 15 million HK$! Hopefully they are indeed flexible.

    Thanks again for your help!


  4. #4

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    Why not buy in HK? I wouldn't be buying in Japan. An aging and declining population, a currency declining in value (which will continue over time), interest rates which may rise under Abenomics. There is no such thing as a free lunch, so these types of places that seem like good buys in Japan may turn out not to be.

    dontdrink&drive likes this.

  5. #5

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    I actually think short term its good, but longer term not.


  6. #6

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    You are aware that the Japanese housing market is a depreciating asset given cultural considerations?

    Freakonomics » Why Are Japanese Homes Disposable? Full Transcript
    Why Japan is Crazy About Housing | ArchDaily
    http://www.nri.com/global/opinion/pa.../np2008137.pdf

    This is a major problem in buying in Japan as houses are basically treated like cars. New home buyers want new constructions.

    Add to this the demographic shift of a shrinking population and the economic problems. Of course there is some money to be made now and then, but given this quirk I'd be hesitant to be a property speculator in Japan.

    Last edited by penguinsix; 04-08-2014 at 08:22 AM.

  7. #7

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    Dude high rental yields are of little help in the light of overall capital declines in a declining country. For growth dynamics you need to look at places like Vietnam, Australia, Philippines. HK also still has decent growth, although its of a different type, with simply more rich people all wanting to move here.


  8. #8

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    Original Post Deleted
    What about HK? Would you not say HK is at the bottom of a new upward cycle about to start?

  9. #9

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    I am not sure I agree with that. When I speak to anyone I know demand for property in HK is very strong. And apart from us now here many more want to move here. I agree though that the big risk is interest rates rise, but would that not only happen if the world economy recovers and that means more growth for Asia, China, and especially HK? Right now if I look at my cost of rent it would be cheaper by quite affair bit to buy and get a mortgage than to keep paying rent. You are paying dead money in a rising market to keep renting in HK which is not what I like or have grown up to be OK with. If you were to buy any location in HK you like or most recommend?


  10. #10

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    Dude prices are expensive wherever u look. People is most countries complain about prices, and in countries where prices are low there is a reason, namely the economy is fuxxxed. HK property is clearly affordable to those paying the high rentals right now and those will be the people who start to buy as prices pick up. As for the rest there is the public housing and those who will keep renting and complaining. Yes you can say the Peak is not affordable. But if you look at other locations prices are actually very cheap and good value. Sai Kung, Park Island and Discovery Bay are some examples.


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