Japanese Economic & Real Estate Trends since 2000

When looking to buy a house, it is important to look at the past, present, and future of the market in which you are buying. Arguably, looking at the past can be the most useful for making decisions in the now and predicting trends in the future. In this article, we will take look at the past 18 years in Japanese real estate, beginning at the turn of the millennium in 2000.

In 2000, Japan was in the process of attempting to recover from a bubble burst in the 90’s. In an attempt to promote economic growth, the Bank of Japan reduced their interest rates to unbelievably low numbers, going from 6%, to 0.5%, to eventually 0.1%. With extremely low rates, investment trusts took advantage of the opportunity and began buying up property in waves. This large burst of transactions gave rise to a mini financial boom.

With many properties being purchased, particularly in the major cities of Tokyo, Kyoto, and Osaka, prices as much as doubled by 2008. However, the market was not flourishing or prosperous. Japan would need to continue to make great efforts to recover and build their economy. From 2008, The Lehman Shock occurred and had a significant effect. In addition to prices falling again, the amount of foreign investors buying Japanese property significantly decreased. However, they did not continually sink lower, and by 2010, prices began to once more become partially stable and even out.

In 2011, Tohoku suffered greatly due to an enormous earthquake and tsunami, devastating a large area of Tohoku, as well as the Fukushima nuclear power plant. Buyers were nervous in the wake of the natural disaster, leading to a slow in the market. At this point it was natural to expect another dip in the market, and investors were worried. However, Tohoku began reconstruction and commerce once more, easing the worries of buyers and investors. Contrary to predictions, prices were able to remain stable and nearly unchanged from before the earthquake. This was a sign of promise in market growth.

From the ‘10’s, there has not been any extreme dips or jumps in the market. Prices have been relatively stable with prices neither too high nor too low. Year by year, all types of property and land prices have increased slightly, but at rates that are expected with normal inflation and population increases. However, with the 2020 Tokyo Olympics coming up in just less than 2 years, the economy is expected to benefit from increased tourism and potential buyers. With the stable current market, investors, both foreign and domestic, have been able to confidentially invest in a variety of both residential and commercial properties. Overall, it is a safe time to invest in Japan.