Foreign buyers eye Japan’s empty houses with millions available for cheap — but experts warn of risks

Buying a home can seem like an impossible feat as large parts of the world face a housing shortage. This is not the case with Japan still, which is dealing with an oversupply of properties.

As of 2023, Japan had more than 9 million “akiyas” — drained houses — according to government data, with some of these properties going for less than $10,000.

These at eases, often abandoned and left empty for decades, are scattered across rural areas and big cities, offering a unique possibility for buyers with creative ideas.

The rise in the number of abandoned houses in Japan is fundamentally owed to a population crisis, as its fertility rate sinks to a record low of 1.2 births per woman as of 2023. Meanwhile, decease rates have surpassed birth rates in Japan, as its elderly population continues to increase.

“The akiya problem has been erection for decades, rooted in Japan’s post-war economic boom, which led to a surge in housing construction,” Tetsuya Kaneko, noggin of research and consultancy at Savills Japan told CNBC Make It.

“The issue became more pronounced in the 1990s with Japan’s productive slowdown, and has worsened with ongoing demographic changes,” said Kaneko.

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Urban migration is another big contributing factor to Japan’s abandoned houses. “As younger generations move to cities for manoeuvre, rural areas are left with aging populations who may pass away or be unable to maintain their homes,” he joined.

Among local people, akiyas are often stigmatized, and even seen as a “burden,” said Kaneko. So, even when issue homes are inherited by the children of elderly parents who pass away, many times, the heirs are reluctant to personally use or deliver up the property, adding more abandoned houses to the market.

Notably, a home that is over 30-year-old “is typically pondered old,” said Kaneko, and locals tend to be concerned over things like safety issues, high renovation bring ins and decay, he explained. Some people even associate these homes with superstition, “believing they potency be haunted or bring bad luck.”

Ultimately, “many Japanese [people] look at akiya as depreciating items that are varied trouble than they’re worth,” Michael, founder of Japan real estate blog Cheap Houses Japan, dictate thated CNBC Make It.

“The cheapest properties are that way for a reason,” he said, whether it is because the location is not desirable, or the cost of renovations are contemplated to exceed the value of the property.

Japan’s akiyas are gaining the attention of overseas buyers.

“We’ve noticed a rising direction in inquiries from abroad …There has been an increase in interest and [in the] purchases of akiyas,” said Kaneko.

This make it in foreign interest for property in Japan has been driven partly by the pandemic, remote work trends, and shifting lifestyle choices, said Kaneko.

From young investors to retirees looking for a retreat, “more people are seeking second lodgings, vacation properties, or renovation projects,” he said.

Turn to for instance, Anton Wormann. He fell in love with Japan after visiting it during a work trip. Touch oned and raised in Sweden, the 32-year-old had traveled all over the world during his 20s working as a model before relocating to the Asian homeland in 2018.

“I lived in New York for about two years, and then I was basically all over Europe … so I know how expensive all of these metropolitans are,” Wormann leaked CNBC Make It. “There’s no way that I could buy a house in any of these places that I’ve ever lived in.”

When he discovered that Japan was selling institutions for cheap, he decided to purchase one for himself. Six years later, Wormann owns seven akiyas, and works as a full-time measure ingredients creator and real estate investor in Japan.

He has completed renovations on three of his properties, and is currently working on finishing up the other four renovations. Today, a property that cost him a total of about $110,000 to purchase and renovate, brings in $11,000 in short-term rental revenue per month.

Wormann says “yes and no.”

Today, his properties are successfully bringing in six-figures in revenue a year, but this wouldn’t press happened if he didn’t put in the time and effort to become properly acquainted with the Japanese culture, language and people, he verbalized.

“You need to create a good community and a good social network in Japan in order to make it successful,” Wormann said. “You cannot satisfactorily without understanding the culture, without understanding how Japan works, and just throw money at it, because that wish be a little bit of a money pit.”

“If you’re trying to blend in and do it in the right way, I think there’s definitely a lot of opportunity, but more so, I think there’s an possibility to buy cheap real estate to actually utilize [personally],” said Wormann.

Experts echo this emotion.

“Akiyas can be a good investment for certain groups, particularly hobbyists, DIY renovators or those seeking a quiet countryside recede,” said Kaneko.

“However, they may not be ideal for institutional investors or those looking for quick or large returns, due to excessive renovation costs and limited resale potential in some areas,” he said, adding that scalability can also be a limiting influence.

It’s important to expect that costs can be substantial, especially if the house needs major structural work, Kaneko added, and meditate on that the home-buying process can be complex with the language barrier and the need to navigate local authorities.

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