I live in Tokyo and know the author, and have had many conversations/discussions with him and other foreigners here. We disagree a bunch of times! But we do agree it's an interesting topic. IMHO it all boils down to:
- Tech pays disproportionately high in Tokyo so yes, it's "affordable" for us.
- If you come from anglo-saxon countries mainly (USA, London, AUS/NZ), Tokyo will seem dirt cheap.
- If you come from cheaper countries like me from Spain, Tokyo will seem alright, not too cheap not too expensive.
- Definitely doesn't seem "one of the most expensive cities in the world" as many people say, and I think that's the key to understand the whole article/author point of view.
The issue is IMHO that Japan, Spain and USA are used to very different standards of living in many regards, so it's just impossible for a straight comparison (the markets I know best). For example, in Japan people are used to 1h+ daily train commute, readers here from the USA are likely used to 1h+ daily car commute, and I'm used to walk across my home city in ~30 min. This makes me prioritize a walking neighborhood near my job (I can walk there in ~40 min in Tokyo), but that means I had to choose either crazy expensive or tiny appt.
Same for house sizes, Japan is a lot smaller but smart about it, (like in boats where every small crevice is taken advantage of), while in Spain it's usual to have a guest/secondary room, and in the USA within that driving time people might even have a whole "laundry room".
Another bit of cultural difference is seen in "America’s largest city, New York started construction on just under 30,000 new housing units in 2020 while Tokyo started constructing 130,000 units."; while it's probably true that the USA needs to build more, Japan sins on the opposite end of the spectrum where they build very cheap and demolish it after 20-40 years. I'd like to see a rate of "housing built vs demolished" to present these numbers as a net positive difference.
>Japan sins on the opposite end of the spectrum where they build very cheap and demolish it after 20-40 years. I'd like to see a rate of "housing built vs demolished" to present these numbers as a net positive difference.
There's a good reason for that: in Japanese experience, older houses = more likely to collapse in an earthquake. Who wants to take that risk? Also, building "very cheap" is part of why housing is more affordable here; instead of prioritizing "character", they prioritize efficiency, safety, and affordability, and striking a balance between those. So if you go looking at buildings constructed within the same timeframe, they tend to all look alike inside, using the same construction materials.
You have a point with net change being overlooked though. I have observed here that it's very common to demolish older multi-unit buildings and replace them with taller ones, so there is a net gain, but not as much as you'd think by ignoring the number of units demolished.
>The issue is IMHO that Japan, Spain and USA are used to very different standards of living in many regards, so it's just impossible for a straight comparison
This is exactly right. I find it really frustrating to try to talk about this stuff with Americans because they simply cannot comprehend a comparison based on anything besides $/square foot. So I try to put it in terms of "how much does rent cost for the average person", and some people will get it then, but not many.
>- Tech pays disproportionately high in Tokyo so yes, it's "affordable" for us.
It does pay higher than typical local salaries, but compared to American salaries for similar jobs it's a fraction as much (esp. with the current lousy exchange rate), so it's not as "affordable" as it might seem to someone making an American tech salary. Still quite comfortable in local terms though.
"Who wants to take that risk?" I do, Japanese society in general is ridiculously risk-averse, and IMHO this is the perfect example. You take risks everyday you don't even know/think off, which are likely multiple orders of magnitude higher than you dying on an earthquake even if you are in the riskiest position. E.g. in the worst earthquake last few decades (2011) and only ~600 (4% of deaths) people died because of the earthquake itself. Even if that happened every year, it wouldn't be in the top 10 causes of death, probably not even top 100 (Japan has 1.2 million deaths/year).
If you are even slightly conscious/purposeful about this, you can do a thousand things with the money you save NOT rebuilding a house in Japan to lenghten your life that are a lot more effective.
About cost, I don't know enough about architecture to tell about earthquakes, but in non-earthquake areas a house built costing 2x as another one (everything else being equal and focusing the extra cost on quality/durability) will go from lasting X years to basically forever, or at least a much much larger timeframe than 2X.
Assuming earthquake are similar (I suspect not), cost should definitely be worse if you have to rebuild every 20-40 years than if multiple generations lived in the same house!
IMHO in Spain (low geo mobility, long-time housing duration) that's a big deal and basically why, while it is a "salary poor" country, people have relatively good lives. That's why most people also go somewhere else for summer holidays, either a family second house, a friends house, etc.
>E.g. in the worst earthquake last few decades (2011) and only ~600 (4% of deaths) people died because of the earthquake itself.
"Only" 600 people died because buildings were constructed to withstand earthquakes. Contrast that with other countries where buildings are not well-constructed, and an earthquake kills tens of thousands.
According to you, buildings should NOT be made to withstand earthquakes, and should instead be preserved because they're old, and then when the whole city collapses due to an earthquake, killing hundreds of thousands, you'll just wring your hands about the poor old buildings lost.
The fact is that engineering gets better over time as architects and structural engineers learn better how to design buildings to handle earthquakes while also being attractive, comfortable, energy-efficient, etc. You can't do that with old buildings; retrofitting an old building to improve its performance in these ways (even if it's possible) will always be MUCH more expensive than just tearing down the building and erecting a new one, just like trying to retrofit a 60s Mustang to perform like a new one will cost millions. There's a reason housing costs in Japan aren't high compared to, e.g. America, and keeping unsafe, ancient buildings around long past their good-by date isn't one of them.
The downside of this is that preserving 'heritage' architecture is a potent form of NIMBYism. It has reached ridiculous proportions in Australia, where ugly (but solid) architecture from 40 years ago needs to be preserved at all costs.
We would all like to live in Venice of course, but when the population of your city is growing fast, this kind of thing is a big problem.
I'm not sure if the people here who say Tokyo is not affordable are reading the article. Tokyo is affordable compared to similar cities like NYC. Tokyo built 130,000 new homes vs NYC's 30,000 in 2020. Tokyo's average home price is $300,000 compared to NYC's at $778,000+.
I just Googled those claims. Comparing the average house price of the Greater Tokyo Metropolitan Area (5200 mi^2) to NYC (472.43 mi^2) is really a biased comparison. I suspect the houses built metric is similarly taken out of context possibly due to houses being torn down (more common in Japan than the US) meaning there's isn't as much of a net new home build up.
Maybe this is the whole point. Tokyo has public transport system that makes commute across such a vast area possible, and this is what explains property prices.
It's a good point you bring up, if you have a bigger area but you can get to everywhere within the same time it doesn't really matter what the area is. They should provide isochrone maps of both cities to give that argument any substance though!
"The median home sale price in New York City as of Quarter 2 was $767K, a 0% change year-over-year. A total of 11489 homes traded, a mere -1% difference compared to the same month last year. In Quarter 2, the median price per square foot was $979, a 6% YoY change. The median home sale price in Manhattan was $1.2M."
"A survey conducted by Recruit of people who bought newly constructed detached houses in the Tokyo metropolitan area in 2021 found that the average purchase price was ¥43.3 million, the highest level since the survey began in 2014."
"In September 2020, the average listing price for a newly constructed detached wooden house in Tokyo of between 100-sqm and 300-sqm (1,076 sqft and 3,229 sqft) was:
Greater Tokyo Area: ¥36,850,000 ($354,000)
Tokyo (23 Wards + Western Suburbs): ¥42,880,000 ($412,000)
Tokyo 23 Wards: ¥59,410,000 ($570,000)
Tokyo western suburbs: ¥40,110,000 ($385,000)"
First off, I’m willing to bet that the size of the Tokyo home is half or less compared to the New York option.
There are “cheap homes” in Tokyo. They are effectively unlivable by modern standards, and when a Japanese person buys one, they do so to tear it down and build something new.
If you do this, all of that is money wasted. The full value of your home will depreciate after 22 years. It only makes sense to buy if you never plan on selling. Or leaving.
tokyo home is 1/2 the size of US. Perhaps. How does that equate to "unlivable"? Perhaps it is the US homes which are too large? Compare 1980 and after McMansions with a standard US home from the 1950-70s urban build-out.
Why should a house be an appreciating asset? With reference to current US building standards which are NOT based on long-term structural integrity.
A car depreciates much faster than 22 years, yet that doesn't seem a waste. What is the depreciation rate on your laptop?
Your claim of "bullshit" only holds if you assume current US cultural norms are the one true way.
The lot is 100 sqm (1000 sqft) the home is about the same, over two stories. Each bedroom is roughly half of what you would expect in an American home.
The kitchen has effectively zero counter space. This is quite common in Japanese construction.
For 60M, you’re going to end up at something like 3/4 of that.
Without checking, I’m willing to bet that standalone houses in the New York area are larger for the money.
Do keep in mind that Japanese homes are designed to last precisely 22 years. So, after 22 years, each of these homes will be worth nothing more than the land they sit on.
IMHO a very peculiar take on the matter, it is the first time that I read that Tokyio has affordable housing (or maybe it has if compared to New York, or London, but these are - as I see it - outliers when it comes to prices).
In any case attributing the difference entirely to the zoning laws seems to me baseless and definitely an oversimplification.
Generally speaking zoning laws can make a substantial difference in house prices where they are simple AND there is land available, but where very little land is available?
There's plenty of land in Tokyo, it's just all used for something, not sitting empty, which I would think is the case for any normal city. The zoning laws means that land can be reused, at any time, for housing if some company thinks it's more profitable to build a housing building there than a warehouse or a store. Restrictive zoning means only a portion of the land can be used for housing, and can never be turned into housing as land becomes more valuable.
The amount of land is irrelevant. Go back and look at the article, in particular the picture of the NYC zoning map. Only certain portions of the total land is actually usable as housing. In Tokyo, this just isn't the case: almost all of it is. You can't tear down an old warehouse in NYC and build a condo tower there, at least not without a lot of political difficulty. In Tokyo, it's pretty trivial.
Look, "available land" means "land that is not used".
It is clear that more flexible zoning laws allows for easier re-use, if there are abandoned old warehouses and other limitations (height of buildings) do not exist, then this may contribute to more availability and lower prices, but you need many, many converted old warehouses to make a dent in availability, and not necessarily large availability drives prices down.
Differences in zoning laws have a relatively high impact in places where there is plenty of available, unused, land.
Their argument is not baseless at all. Zoning laws ban the building of new homes in certain zones. Zones which do allow housing in America are height restricted and area restricted. Tokyo allows house building homes in every zone but two. This includes building homes on top of existing buildings where "very little land is available".
Zoning, as the article mentions, is one important element. I think there are others. The excellent transit system, and cultural acceptance of small homes for example.
I think these articles should explain difference between Tokyo and Seoul. South Korea basically copied Japan's zoning system, it is inclusive, central, etc. and Seoul has excellent transit and Koreans are (although not to the extent of Japanese) fine with small homes and high density. Still Seoul is nearly 2x as expensive as Tokyo.
Good points. I wonder to what extent the Japanese real estate bubble pop of 1992 played a role. Housing in Tokyo was sky-high in 1989, to be sure, despite their zoning rules being enacted in 1968.
Here is the historical data for Japan's residential poperty prices. Make sure to set the start date in the chart to 1980 (direct link with these parameters does not seem possible) to know how cazy it was in the late 80s/early 90s.
The only way you can get 37 million people in Tokyo is if you account for the entire Tokyo prefecture (similar to state/province). The western parts are largely rural and accounts for most of the population decline. The actual urban area in the central wards are still growing.
I mean if you restrict things enough than any metric is possible. Looking at 500k people (your link) out of 37m (Tokyo Prefecture) or 9m (Tokyo 23 Wards) I feel isn't the best metric.
Probably best to just restrict both NYC/Tokyo to their urban areas and their respective housing costs which is what this blog post is originally about. Otherwise, you can just say there are "free" homes in "Tokyo" because there's a lot of abandoned homes in the rural parts that you can squat.
For Tokyo, I think discussions about population change should be focused on the 23 central wards. Here's a more up-to-date source: https://www.toukei.metro.tokyo.lg.jp/jsuikei/js-index.htm (it seems to be 14mil today vs 9mil in 2016)
nimbyism has become a structural issue since we allowed real estate to became an asset class rather than primarily a place to live. It's not just a case of rich people being d1cks - it is this too - but also because so many home owners now depend on house price inflation for future retirement. This was actually a central part of the 'American dream' and actively sold to the people as the way to get ahead.
Question must be - why? Why owning stocks wasn't pushed nearly as intensely? It makes more benefit to the economy (to say the least). Is it just the Red Scare that motivated that course of action of the government?
> Why owning stocks wasn't pushed nearly as intensely?
From an European POV, you Americans already push stocks and individual retirement savings like they are a golden calf with your 401k plans and the slaughter of actual pension systems.
As for home ownership: it certainly is better in retirement if you own your paid-off home and only have to foot property tax, utilities and a savings fund for renovation out of your retirement accounts or pension payments.
What are you talking about? Government-run pension systems, or company-run ones? The government-run one is called "Social Security" and it hasn't gone anywhere, and certainly hasn't been "slaughtered". It hasn't changed in ages really; the problem is there's fewer contributors and more recipients now due to population aging, so when the surplus runs out in 15 years, it'll be restricted to only incoming funds, so recipients will receive less.
Company-run pensions are indeed dead in America, for good reason, being replaced by 401k plans. Why would you want your retirement security tied to your former employer? What happens when the company mismanages the pension, or the company fails? This has happened many times here, with older people losing everything except the social security which isn't that much. That's why they moved to the 401k system, so retirement funds are put into the hands of a better-regulated 3rd party financial firm to be invested in securities.
I don't see the problem here. I have my issues with many things in America, but this is one thing they did right. It could be better: some 401k providers are much better than others, for instance (some have poor securities selections available, some have high fees, etc.), but overall it's much better than the old days of having a company pension.
> Company-run pensions are indeed dead in America, for good reason, being replaced by 401k plans. Why would you want your retirement security tied to your former employer? What happens when the company mismanages the pension, or the company fails?
What happens when the economy tanks? The fact that so many Americans have tied their post-work existence to "stonks only go up" is a damn perverse incentive for the US government - as it now has to think "what will the stock markets do if we introduce political measure XYZ" every time. Strong environment regulations for oil and power companies? Regulation for social networks? Is this a good idea when a lot of your people have a sizable exposure to these in their retirement accounts?
Meanwhile, here in Europe, pensions tend to be financed by the pension contributions of the current working generation. It's not perfect, far from it, but at least our pensioners don't have to fear random shit wiping out a third of their pension funds (assuming a 100% investment into S&P 500 [1]). We don't tie neither our pensions nor our healthcare to our employer (or even to being employed).
I don't understand what you're arguing about. We have *the exact same thing*. It's called "Social Security". Did you somehow not read that part of my message? It's not tied to the stock market or employers; it's entirely government-run.
There are pension systems in the USA dependening on industry. The issue is that the pension systems have to depend on an ever-increasing pool of contributors which is not sustainable long term.
I’ve wondered that. If innovation has an optimal economically efficient rate then would businesses wasting inflated stock market capital chasing competitive advantage ‘before it’s time’ be a good thing? (Heretical thought) Perhaps when there’s too much money effectively forced into poor investment opportunities (stocks, housing, whatever) countries would be better off taxing and investing it in education, infrastructure, energy security, etc - things that help generate better and wider returns in the future?
Education - i doubt it has much room for growth. It already reached a phase where people who are too dumb to get any kind of degree are chasing degrees that will bring them no benefit in life. If anything, there needs to be a crackdown on higher education to prevent too many people from wasting the most productive years of their lives for nothing, instead of yeah, spending them building infrastructure (roads, bridges, etc).
"The fact that real estate in FL or TX has melted up over the past 2-3 years is not evidence of succeeding to build a better model than California, it's evidence that they are becoming like California." -- Peter Thiel at NatCon 2022
They don't, house prices in Tokyo are anything but affordable.
"The price of new apartments in Tokyo toppled a 30-year-old record in 2021 as rising demand from dual-income households and increasing construction costs boosted the Japanese capital’s once-moribund housing market."
This is basically BS; housing in Tokyo is only expensive from an American point-of-view because Americans only look at $/square foot, and don't realize not everyone wants or needs a palatial home. 25m^2 apartments are very common in Tokyo and generally affordable by normal people, but such a compact place would probably be downright illegal in America because of housing codes.
Try getting a nice, safe, comfortable, and modern apartment in NYC on USD$1000/month; I don't think it's possible. In Tokyo, it's common.
Also, Tokyo being one of the most expensive cities to live in is a myth, so any source that makes that claim is, to me, immediately disqualified as having truthful information. Going out to eat here costs a fraction of what it does almost anywhere in the US.
I say this in complete ignorance, but how do Japanese people live comfortably in a 25sqm apartment? Are there communal cooking/bathroom areas? Do they use "hacks" like fold-out sofa beds to maximise space? Would that apartment house single people, and couples get a 2br or larger?
As an Australian, I wish I could pay less money and get less floorspace. Pretty much the only way to get that tradeoff is student accomodation, and the kitchens there aren't built to be particularly functional (and the locals are probably not the neighbours I really want). I'd also like to be able to trade off on size while moving further away from the CBD, or at least I historically would have been, but there's no apartments near train stations in most suburban areas in the places I looked.
I love the idea of a living space that's optimised and cozy. I don't need an entire room for some machines for laundry, I don't need two rooms for bed and for computer, and heck, I hardly need walls at all. Not many studios here either, sadly.
One thing I'll note: Many Australians talk ill of apartment quality here. Both I've lived in had double glazed windows, well insulated walls, and modern and reasonable-quality fittings. Maybe I've rolled high a couple of times? But signs currently point to no, and I think the "Australian apartments are crappy dogboxes" is more of a media talking point than reflective of reality
I have 85m2 for a family of 4 and we are kind of privileged here. as many people have one generation more living under the same roof and less space. We have one bedroom, a kitchen that also serve as dining room, I have a separate office, living room, bedroom, my 2 daughters share the same room (by choice, the "office" used to be destined to be one of my daughter's bedroom). We could easily cram office, living room and parents bedroom into one room without really compromising in term of quality of life.
Sure if you are a kitchen appliances hoarder, you need a 80m2 kitchen already so there is very little room for anything else. If you know how to cook and use your hands everything is much simpler.
Strongly disagree as someone who live in 20m^2 for the past 5 years.
Public space like parks and the walkability of the neighborhood are very important factor for comfortable living in small space. Both of which Japan do very well.
I visited Tokyo, Kyoto, and Hiroshima. I found Tokyo unpleasant. There is very little greenery and many of the so called rivers are actually lined in concrete. Commercial districts are packed with people.
Hiroshima was much more pleasant. There are walking paths, greenery, and even restaurants along the river. Kyoto was closer to Hiroshima, with areas with wide set back streets, not to mention forests.
There are a few parks in Tokyo but I had to travel to them but also pay to enter them! The unspoken trade off people who advocate for dense urban development fail to mention is the elimination of private green spaces for most people.
When I lived in Tokyo I'd alternate weekends. One weekend was spent in an urban area and the next was spent in the mountains, which are incredibly accessible from downtown as they're on the city transit network -- no need to take an inter-city. Best of both worlds in many ways.
In Oslo, Norway there is a lot of demand for aparments below 40m2 for young couples. 60m2 is considered OK for a family with 2 kids as long as floor plan is reasonable.
Really depends on the person, I lived in 31m² 1DK for two years. I felt I had plenty of room. I especially loved how quickly I could clean up the place and find misplaced items. Finding a lost item was frustrated as I thought how stupid it was to lose an item in a tiny apartment, but it always resolved in about five minutes.
Only as a data point, in Italy the minimal size a house can legally be called a house is 28 sqm, intended for a single, then you add 10 sqm for each additional adult (this is national law, since 1975).
Local laws may increase these mimimum sizes, the tendency is to set the minimum to around 40-45 sqm in many places.
United states is already more affordable than most of the world if you use median income to dollars per sqft per month in rent.
The whole Tokyo is so cheap meme really has to die. It’s just a bunch of rich foreigners enjoying purchasing power differences. Average Tokyo people on average Tokyo wages certainly do not think it is so cheap. Go watch Asian boss on YouTube.
> It’s just a bunch of rich foreigners enjoying purchasing power differences.
Not all foreigners who consider the grass greener in Tokyo are American or have a purchasing power advantage. Some just come from an area where housing affordability makes Tokyo look good.
Generally, it would be people coming from anywhere with a higher median multiple than Tokyo. (That is, ratio of median housing price to median household income). For example Vancouver, with a median multiple of 11.9 (in 2019) will have a lot of people who think Tokyo's ~4.7 seems very affordable by comparison, even though 4.7 is not considered affordable in absolute terms.
That's not really relevant - what's relevant is how much the migrants are making in Tokyo. Presumably they are making much more than the average Tokyo citizen which is why it's perceived as affordable, and is my point.
It seems very relevant to me! The median multiple is most directly relevant to people earning the median salary and buying the median house. And by this metric Tokyo blows Vancouver out of the park.
Even if they're working a job making less than the median Tokyo salary, they'll likely still rate Tokyo's housing affordability as much better than when they were working that job in Vancouver, earning below-median Vancouver salary.
The median multiple does not take into account the quality of housing. So, again, irrelevant. Housing in Vancouver is much larger than housing in Tokyo. Furthermore it's much easier to migrate to Vancouver permanently compared to Tokyo. Any affordability as a result of gatekeeping is an illusion.
What metric do you prefer? Or, what metric should a Vancouverite use to judge whether they'd struggle less to afford housing in Tokyo, given an opportunity to move there?
And, reciprocally, what would you tell a Tokyoite who is considering a move to Vancouver? The ones I met all were shocked by the cost of rent, and really struggled, especially the ones working service jobs -- like hotel staff or restaurant server -- who could get by much more comfortably in Tokyo with those jobs. They could only afford crowded shared rooms in Vancouver, and ate into their savings to do so. But even the tech workers from Japan found Vancouver less appealing.
Lol this has to be the worst headline ever. Tokyo is nowhere affordable unless you have a SV salary while living in Japan. Median Japanese salaries are not high and that is precisely why people commute from very far away to go to work in Tokyo.
It also fails to mention the actual reason why the houses have been “affordable” for Japanese people. The banks give out 30 year mortgages on very low rates which you can deduct from your income tax [1], without requiring a big deposit.
Generous loans increase buying power and, in the absence of elastic supply, would result in rising prices that keep housing expensive. The wonder is that you can buy a new construction 3-story 3 bed/2 bath house 5 minutes from Sugamo station for $550k, despite the mortgages being so generous. (Source: the flyer that a real estate agent handed to me in the street last night).
It's true that people live smaller house than they want, but the size shouldn't be too big. Metropolis with great public transport or good city with big house and car, pick one. Riches can have big house and a car in the metropolis but it's impossible everyone to have. For who prefer big house, they can live in local cities if they can remote work
> For who prefer big house, they can live in local cities if they can remote work
If you want to have a family you basically can't live in a small cramped apartment in the city. That's why families with kids move out and people commute like crazy.
- Tech pays disproportionately high in Tokyo so yes, it's "affordable" for us.
- If you come from anglo-saxon countries mainly (USA, London, AUS/NZ), Tokyo will seem dirt cheap.
- If you come from cheaper countries like me from Spain, Tokyo will seem alright, not too cheap not too expensive.
- Definitely doesn't seem "one of the most expensive cities in the world" as many people say, and I think that's the key to understand the whole article/author point of view.
The issue is IMHO that Japan, Spain and USA are used to very different standards of living in many regards, so it's just impossible for a straight comparison (the markets I know best). For example, in Japan people are used to 1h+ daily train commute, readers here from the USA are likely used to 1h+ daily car commute, and I'm used to walk across my home city in ~30 min. This makes me prioritize a walking neighborhood near my job (I can walk there in ~40 min in Tokyo), but that means I had to choose either crazy expensive or tiny appt.
Same for house sizes, Japan is a lot smaller but smart about it, (like in boats where every small crevice is taken advantage of), while in Spain it's usual to have a guest/secondary room, and in the USA within that driving time people might even have a whole "laundry room".
Another bit of cultural difference is seen in "America’s largest city, New York started construction on just under 30,000 new housing units in 2020 while Tokyo started constructing 130,000 units."; while it's probably true that the USA needs to build more, Japan sins on the opposite end of the spectrum where they build very cheap and demolish it after 20-40 years. I'd like to see a rate of "housing built vs demolished" to present these numbers as a net positive difference.