Mike Shedlock

Thanks to a rapidly aging population, record numbers of Japanese homes sit vacant according to the July 30, 2014 Asian Review report Vacant Homes in Japan Reach Record as Outlying Population Shrinks.

A record 13.5% of all homes in Japan were unoccupied as of last October, reflecting an exodus from outlying regions of the country and a general aversion to used homes.

Preliminary figures for a study on homes and land, conducted once every five years, were released on Tuesday by the Internal Affairs Ministry. The vacancy rate rose 0.4 percentage point from the previous survey. The number of empty homes grew by 630,000 to a record 8.2 million, and there were a record 60.63 million homes in all, an increase of 3.05 million.

Yamanashi Prefecture had the highest vacancy rate at 22%, largely due to a population outflow to Tokyo and other large cities. Nagano and Wakayama prefectures followed at 19.8% and 18.1%, with the four prefectures in Shikoku all at the 17% level.

The concept of renovating homes to make them last longer is not firmly established in Japan, according to a ministry official. Real estate companies do not actively handle used homes because they are considered to have lower value than new homes.

An outdated tax system meant to promote construction of residences on farmland during Japan's high-growth era decades ago has been another obstacle. Landowners that tear down homes would see their fixed-asset taxes for that land roughly quadruple because a tax break would no longer apply. This has prompted many landowners to leave unoccupied homes as is.

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.