The fall of the real estate myth‘Oversupply’ during the real estate boomThe young population is decreasing due to aging, and the bubble collapses due to lending regulations from the Bank of Japan.Financing becomes easier after BenomicsRecently, major cities are slowly recovering... but full recovery is difficult due to the super-aging population.A bigger problem in Korea, where there are many apartmentsEmpty houses should be demolished with subsidies and rental businesses should be increased at the corporate level. In front of the house, white dust sat, items that could not be considered trash or luggage, and a broken bicycle waiting for their former owner. Several flower pots with dried and twisted leaves were lined up on the second floor windowsill. The interpreter who visited this place together said, “There must be quite a lot of lonely deaths in a place like this.” It was an empty house, an empty house where no one lived. An old residential area in Sumida-ku, Tokyo, Japan, visited on June 7th. This place, 40 to 50 minutes away by subway from central Tokyo, was like a ‘land of the elderly.’ At the entrance to the village, an old man was playing the guitar. When I looked into the place where I heard a crackling sound, I saw several old people wearing work clothes and working on machines like young people. It may seem romantic at first glance, but the living conditions seemed to be poor as there were many houses here and there that appeared to be vacant.
![[한국, 저성장 일본 반면교사 삼아라(6)] 도쿄도 열집 중 한집 '빈집'.. 집값은 25년 전의 '⅓토막'](https://image.fnnews.com/resource/media/image/2016/07/03/201607031803493526_l.jpg) An abandoned vacant home in an old residential area in Sumida-ku, Tokyo, Japan. The number of empty houses in Tokyo is about 817,000, accounting for 11.1% of all houses. As a result of a combination of aging and oversupply, it is expected that 251 TP3T of homes in Japan will be vacant by 2020. Photo = Reporter Lee Jeong-eun
【 Tokyo (Japan) = Reporter Lee Jeong-eun】 When we searched this area on SUUMO, a Japanese real estate information site, surprisingly, monthly rental properties for old public houses were listed. These are mainly houses built 40 to 50 years ago. The monthly rent is 40,000 yen (approximately 450,000 won) for an area of 21㎡, 30,000 yen (approximately 330,000 won) for 17㎡, and 23,000 yen (approximately 250,000 won) for a smaller area of 12㎡. ) was just that. An interpreter who has lived in Tokyo for about 10 years explained, “Given the condition of the house, it seems like it should be much cheaper than this, but it is at least as good as it is because it is located within the 23 wards of Tokyo.”
Gongga has emerged as a problem in Japan. Housing, which was oversupplied during the real estate boom, is now starting to become vacant. Vacant houses, which began to increase in rural areas, are now a common sight in large cities such as Tokyo.
The number of empty houses in Tokyo was 817,000 as of 2013, accounting for 11.1% of all houses. Korea is already rapidly aging and the number of empty houses is increasing, especially in rural areas, raising concerns that Korea will end up like Japan.
![[한국, 저성장 일본 반면교사 삼아라(6)] 도쿄도 열집 중 한집 '빈집'.. 집값은 25년 전의 '⅓토막'](https://image.fnnews.com/resource/media/image/2016/07/03/201607032126254627_l.jpg) ■ Harmful effects of oversupply and concerns about urban slums
Japanese experts cited aging society, government real estate loan regulations, and long-term low growth as major factors in the collapse of the real estate bubble. In particular, Japan entered an aging society in the 1990s and a super-aging society in the 2000s, so the effects of aging have already been reflected in the housing market. Currently, housing prices in Japan have fallen by one-third compared to the bubble period.
Professor Chihiro Shimizu of Nihon University said, "The elderly dependency ratio, which is the ratio of the elderly population aged 65 or older per 100 economically active people aged 20 to 64, is currently 38% and is expected to rise to 70% in 2040." He added, "As the elderly population increases, real estate “If the number of young people, the core demand group, decreases, an imbalance between supply and demand will occur, which will inevitably increase downward pressure on real estate prices,” he explained.
He continued, “At the time, the Bank of Japan (BOJ) blocked lending to real estate, and financial institutions also had a lot of bad loans, so the long-term recession that lasted for 20 years also had an impact.” He pointed out, “It has only been in the past few years that the country has turned to recovery thanks to Abenomics and other initiatives.”
In fact, there were signs of a revival of the real estate market centered around key subway areas in some major cities. According to Remax Japan, a Japanese real estate information company, the average price of used apartments (70㎡) in Tokyo's 23 wards has risen for three consecutive years, and last year recorded 47.48 million yen (about 534.24 million won), up 13% from the previous year.
An official at Remax Japan said, "Funding has become easier with the introduction of negative interest rates in February this year, and prices are rising as investment funds are concentrated in real estate due to the impact of rising stock prices and plans to increase inheritance tax."
He continued, “The vacancy rate for offices in the five downtown wards (Chiyoda, Minato, Chuo, Shinjuku, and Shibuya) is decreasing and rents are rising gently. In the case of Marunouchi, the vacancy rate is only 1.37%.”
In fact, in Marunouchi, Japan's business center, which I visited that day, new buildings were being built all over the place. Arihiro Ohba, manager of KOTRA Japan Regional Headquarters, said, “A new building is being built across from the Tokyo Marunouchi Building where KOTRA Japan Regional Headquarters is located, and the monthly rent for this building is 54,000 yen per 3.3㎡,” adding, “On average, 4 “It’s around 10,000 to 45,000 yen,” he explained.
However, it is still below the level of the real estate boom period. Before the Lehman shock, it was close to 100,000 yen per 3.3㎡.
It is believed that the reason the Japanese real estate market has not fully recovered is because the economic situation is not as good as before. Japanese Prime Minister Shinzo Abe recently postponed the consumption tax rate increase scheduled for April next year to October 2019. It is not easy to achieve the targeted inflation of 2%.
Professor Shimizu said, "The reason why the Japanese economy is still not doing well is that productivity has not improved at all." He added, "The real estate market will not recover until an environment is created where individuals can pay for houses or companies can pay high office rent." “You can,” he said. “There are not many companies in Japan now that can afford the high rents,” he added.
Japanese society is currently experiencing a lot of concerns about public housing. Until 2010, Japan supplied 1 million new homes per year. Although the number has now decreased to 600,000 households, most experts believe that it is still a large number. In Japan, it is expected that a total of 251 TP3T will be vacant after 2020. That's about 1 out of 4 households.
Professor Shimizu pointed out, "When a building is old, the procedure is to tear it down, rebuild it, and build a new one. The problem is that there is no driving force to demolish the old building and build a new one. So the cost of construction has increased, and that is the biggest problem." .
For this reason, it is predicted that apartment complexes in the city center will become the biggest problem in the future. He pointed out, “Empty houses in the countryside can be demolished, but luxury apartments in the city cannot be rebuilt without the consent of more than four-fifths of the owners.” He explained, "The number of buildings like this increased a lot during the period of high economic growth in the 1970s, and the biggest problem is that they are turning into slums. They can't be demolished and they can't be rebuilt." He continued, “There are many large high-rise apartments in Seoul, Korea. This will become a big problem in Korea in the future as well.”
How should Korea prepare?
What should Korea do to avoid following in the footsteps of the Japanese real estate market? Professor Shimizu said the government should make efforts to increase demand for real estate. He explained, “I also have two houses, one where I can relax on the weekends and one close to my workplace. In this way, we must encourage housing demand to increase even if the population decreases.” This is an area where measures such as easing taxes related to two-family homes are needed.
Professor Shimizu went on to advise, “Basically, in order for the real estate market to remain stable, the economic situation must remain stable, and in the case of vacant homes that have become completely useless, like in Japan, it is better to provide subsidies and destroy them.”
There is also an opinion that Korea will not enter a bubble burst situation like Japan. Park Sang-jun, a professor at Japan's Waseda University, said, "Korea's real estate is not in a bubble like Japan or the United States, and it does not appear that it will enter a bubble again."
However, he said, “It is unfortunate that the policy authorities are unable to recognize that the demographic structure and economic outlook are changing.” He continued, “In a country with a declining young population, there cannot be an overall increase in real estate prices that exceeds the general inflation rate. Therefore, policies that stimulate demand by easing lending conditions or increasing the loan amount will only create a small bubble. “It is never desirable,” he emphasized.
Professor Park pointed out that the reason rent prices are soaring is because people are reluctant to buy a house and think monthly rent is a waste of money. He explained that people's reluctance to purchase homes is evidence that they believe real estate prices will not rise as much as they did in the past.
Professor Park said, “Just as construction companies and rental companies rent on a monthly basis, we need to change our policy to increase rental at the corporate level rather than pre-sale,” and added, “I think that if people become more comfortable with living on a monthly basis, the construction industry will also pick up.” He emphasized.
nvcess@fnnews.com
Original link: http://www.fnnews.com/news/201607031803483511
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