Impact of Japan's Aging Population to Housing Market in Japan

Japan has been at the forefront of innovation, pioneering various technologies globally. Amidst all their achievements, Japan faces an ongoing predicament – an aging and shrinking population. As of 2021, 30% of Japan’s population is over the age of 65, and this is projected to grow to over 35% in the next 20 years. 

The country’s aging population is profoundly affecting the housing market, with more and more homes being abandoned, leading to a surge of akiya houses around the country. As of 2023, Japan has recorded over 9 million vacant homes, posing a record high percentage of 13.8% of all residences. 

The younger generation is increasingly choosing to relocate to urban areas, mostly for employment opportunities, leading to severe depopulation in rural areas. Young professionals opt to rent apartments in Japan rather than own houses in the countryside. Older homes often have low marketability due to the renovation costs that accompany them hence, younger inheritors choose to abandon them, further exacerbating the issue of vacant houses within rural regions. 

Challenges and Policy Measures to Address the Issue

The Japanese government enacted the Vacant Houses Special Measures Law in 2015 in response to the growing number of akiya houses in the country. Municipalities are empowered to designate certain neglected properties as “specified vacant homes,” requiring owners to either demolish or repair them. Failure to comply with such conditions will result in loss of property tax benefits. 

Despite such measures, some choose to retain the old rundown houses to benefit from the lower property taxes. Vacant lots are actually taxed higher, thus owners choose not to demolish older properties. Also, demolition costs are very expensive, leaving owners to just abandon their old homes altogether. 

Opportunities Within the Issue 

“Akiya banks” have been established by local governments and private entities in efforts to attract potential buyers. These vacant properties are listed online to reach a wider audience and to attract foreign buyers interested in buying houses in Japan. Some municipalities offer subsidies to help renovate akiya houses to encourage more people to settle in rural areas. 

During recent years, the akiya houses have become increasingly popular among foreigners who wish to own property and reside within Japan. Although administrative procedures and renovations can be quite challenging, purchasing old abandoned houses is a reasonable entry point into investing in property in Japan.