Life in Japan blog - 3 -Real estate prices in Japan, in other words how much does it cost to purchase an apartment in Kobe

There might be many of us interested in the real estate market of Japan. Most of us think Japan is an expensive country, which is true in general, but this might not be the case for real estates. Since, before coming to Japan, people around me were filled with the expensive image of Japan, I thought the same. I have already written a blog article about the cost of living in Japan, and I realized many of you read it, therefore I decided to investigate real estate prices on the peninsula. We can get a pretty descriptive picture of a country’s economy by looking at its real estate market.

In Japan you can by a square meter for a bit more than $1000

My Japanese knowledge in the first two years did not allow me to negotiate with real estate agents, since my vocabulary was very limited. Recently I felt that I could handle such a conversation and headed for a real estate office in central Kobe. I suspected that the prices displayed on the wall of the agents are not the final prices. I was also curious about the fees the buyer should pay in Japan when purchasing real estate. Are there any hidden fees? I would like to publish these results in this short article. I have basically two goals with this article. One is to depict a real image of real estate prices in Japan for those who still think that it is an expensive country. On the other hand this article could serve as an initial guidance for those who are considering to buy an apartment on the peninsula.

Since I am attending Kobe University, the whole story takes place in Kobe. So what is Kobe actually? When I mention the name of the city in front of Japanese people, they usually say “神戸はいい街ですね!” with enthusiasm . It means something like “Kobe is a great city, isn’t it?”. I suppose this implies that I am not living in the ghetto of Japan and this survey has been carried out in of the best cities of Japan. The initial question is obviously very difficult, because when talking about the price of a real estate object we have to consider many factors. The result of this research would be completely different if I did it on Kyushu, in Tokyo or Hiroshima. Long story short, every place has its advantages and disadvantages. The advantages of Kobe are the following: 20 minutes train access to Osaka, most of the places in the city offer great panorama to the sea, surrounded by Mt. Rokko, perfect place for hiking, most of the western clothing brands are in Motomatchi, ideal for shopping, Chinatown in Motomatchi. A tiny disadvantage might be that since Kobe is not the capital, wages might be a bit lower than in Tokyo. Let me finish the sort introduction here and I will share my experiences from now on.

In Japan ordinary people do not really buy real estates from each other. Therefore you have to find a real estate agent when considering a real estate purchase here. Upon entering the shop, you are served with tea and cookies and they start asking you about your intentions. They have hundreds of questions, be prepared! It is better to think of a few variants and not to improvise on the spot, because sometimes I realized that I don’t even know what I want. They can make advantage of such a situation and sell or rent you something sub-optimal.

Basic questions in the shop:

  • Rent or purchase?
  • Budget?
  • How long have you been in Japan?
  • How long are you in Japan for?
  • What kind of visa you have?
  • Where are you living currently and how much is the rent?
  • Personal data.
  • Where would you like to buy or rent?
  • For how long?
  • How many tenants?

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You are usually given a form, which you have to fill in by answering the questions above. After that the agent starts to hesitate and after playing a small show starts to look for some suitable estates. His first reaction regardless of your specified budget that the money will not be enough because your are searching in an expensive area. Don’t worry, they play this game with everybody. This has an ultimate goal, namely that when eventually he comes up with a reasonable object, you can (have to?) be grateful and let’s admit it is a great strategy. At least for the first time. When you have experienced it many times, it feels a bit ridiculous. Anyway, again, this was the case. I told him, I need an apartment in central Kobe, around Sannomiya(神戸三ノ宮)for about 10 million yen which is something like $100.000. I thought this is the amount of money that a mortal person can hold. As I mentioned above, ha goes like “It is not going to be enough…” and then he draws a 7.5 million yen estate. Let’s abandon the numbers for a while and talk about something more important. I was told, that most of these apartments could be rented out while the owner is not occupying it. It is important to mention here, that in Japan however location does matter, but if an apartment is not in the city center, it does not necessarily mean that it cannot be rented out. This is simply because the infrastructure (bus, subway, train, schools, hospitals, etc.) are distributed homogeneously around the country, which mean citizens would rent apartments with pretty much the same probability everywhere. Okay, Tokyo might be a bit different. But if we consider the rest of the country, the apartments below can be rented out for a reasonable amount of monthly rent ($400-$600).

I was told that the following factors can influence the price of a real estate in Japan:

  • the year the building was built in
  • environment
  • distance from a bus, subway or train station
  • layout (often due to lack of space the toilet and the bathroom are not separated, locals do not really like this)
  • floor
  • type of rooms (western, Japanese)
    • In addition to the information above, I questioned him regarding the costs when purchasing a real estate in Japan. I was told the agencies have a fixed 60.000 yen (~$600) fee, plus a varying fee, which is the 3% of the sale price. Generally companies prefer to have their tax paid by their customers, as such you have to add a 8% (this is the current VAT rate in Japan (2016/10/13), might change though) to the agency fee.

      I thought that is all, because this is already a huge amount, but no. It turned out, that you have to register your purchase at the local office (probably the same in other countries as well). This costs an additional 2-300.000 yen (~$2000-$3000). And it is not over yet. Buyers have to pay real estate acquisition tax, which is calculated in the following way. Take the sale price subtract 12 million yen and if it is still positive calculate its 3%. If you are buying a 12 million yen estate for example, then this factor is zero. Also keep in mind, that it is possible to negotiate with the seller through to agent. If you don’t use this option you might accidentally buy an overpriced estate. I would say if you are lucky enough, you might end up with all your costs reduced to zero.

      Finally let’s see the apartments the agent introduced me:

      • ① address: 神戸市中央区日暑道一丁目 (Kobe central)
      • ② price: ¥12.800.000 ($128.000) size: 24 sq. ( ¥533.333 ($5333) / sq. )
      • ③ construction year: (2009)
      • ④ rented out for: ¥69.000 ($690) / month
      • ⑤ 4 minutes walk from the train station
      • ⑥ 9. floor excellent view
      • ⑦ common cost: ¥8500 ($85)

      • ① address: 神戸市灘区岩屋中町2丁目—6−4(Kobe outskirts)
      • ② price: ¥7.800.000 ($780.000 ) size: 31.76 sq. ( ¥245.591 ($2455 ) / sq. )
      • ③ construction year:(1988)
      • ④ 8 minutes walk from the train station
      • ⑤ 2. floor
      • ⑥ common cost: ¥9560 ($96)

      • ① address: 神戸市中央区中山手通6丁目 (Kobe central)
      • ② price: ¥9.900.000 ($99.000) size: 48.39 sq. ( ¥204.587 ($2046 ) / sq. )
      • ③ construction year:(1977)
      • ④ 6 minutes walk from the train station
      • ⑤ 4. floor
      • ⑥ common cost: ¥10270

      • ① address: 神戸市灘区鶴甲6丁目(Kobe outskirts)
      • ② price: ¥7.500.000 (75.000 ) size: 65.94 sq. ( ¥113.739 ($1137) / sq. )
      • ③ construction year:(1977)
      • ④ 14 minutes walk from the train station
      • ⑤ 5. floor
      • ⑥ common cost: ¥10000 ($100)

      • ① address: 神戸市中央区布引町二丁目4−8(Kobe central)
      • ② price: ¥9.000.000 ($90.000) size: 21.16 sq. ( ¥425.330 ($4253) / sq. )
      • ③ construction year:(1999)
      • ④ 2 minutes walk from the train station
      • ⑤ 3. floor
      • ⑥ common cost: ¥7000 ($70)
      • ⑦ rented out for: ¥57.000 ($570) / month

      • ① address: 神戸市灘区鶴甲3丁目(Kobe outskirts)
      • ② price: ¥7.700.000 ($77.000) size: 48 sq. ( ¥160.416 ($1604) / sq. )
      • ③ construction year:(1977)
      • ④ 19 minutes walk from the train station
      • ⑤ 1. floor
      • ⑥ common cost: ¥24.500 ($245)

      Having a glance at the data above, it is clear that central Kobe is more expensive than the outskirts. I have also found it astonishing that however Japan is always presented is a very expensive country (which might be true for some parts of the life), but you can still buy a square meter for a bit more than $1000. Just simply think about other (developing!) countries in Asia, say China, where real estate prices are sky rocketing. In addition to this, I suppose it is fairly easy to rent this objects out, because your neighbors are generally nice, calm and peaceful people. If you want to read about commodity prices in Japan, don't forget to check out my previous article.

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