Japan’s 30-year building shelf-life is not quite true

by Philip Brasor and Masako Tsubuku

In the past decade or so, certain claims about Japan’s housing market have come to be accepted as facts. One is that Japanese houses are only meant to last 30 years. This idea has led to the belief that Japanese houses are shoddily constructed, and though there is some truth to that, they can last much longer if owners look after them — a credo that holds everywhere in the world.

The notion that Japanese houses self-destruct after three decades is a function of the government’s plan to keep the economy humming with a constant need for residential construction, since it was the the Land Ministry that concocted the 30-year time limit.

If the government says it, then it becomes a self-fulfilling projection, but the ministry didn’t arrive at that estimate through an evaluation of quality. It simply counted all the houses that had been demolished. What the statistic really means is that the average age of a house in Japan when it is torn down is 30 years. Older houses still standing are not included in the equation. Some experts think the average Japanese wooden home can last up to 65 years, it just depends on whether or not the owner takes care of it.

A similar misdirection dominates the used-condominium market. Because modern condos are built with steel and concrete, they are expected to last longer than houses. The government itself once said collective housing should last up to 150 years, but that was back in 1951, when only the well-to-do bought apartments. The estimate now is 37-40 years, after which the government suggests a condominium either be renovated or rebuilt.

An editorial published last November by online real estate portal Homes Press, however, challenges this assertion. The article cites Land Ministry figures that say, as of April 2013, 218 condominium buildings in Japan, comprising some 15,000 units, had either been rebuilt or were in the process of being rebuilt, meaning that their entire structures were or are being replaced.

Given that about 1 million condominium units built before 1981, when earthquake standards were bolstered, are still standing and usable, the rebuilt number represents a little more than 1 percent of the units that should be rebuilt or renovated. Homes Press says rebuilding can’t be done on the scale that government and industry advocate, because it isn’t practical for the vast majority of old condo owners.

Condomiums for the masses first appeared in Japan in the mid-1950s, initially as a means of alleviating the postwar urban-housing crunch. Their main selling points were unified dining-kitchen spaces and Western-style toilets. The first ones were built by the public Japan Housing Corporation, mainly in concentrated “new towns” in the suburbs of major cities. Condos became the most common form of resident-owned housing until the late ’70s thanks mainly to the Housing Finance Corporation, which offered loans with easy terms for the average salaried worker.

In 1981, following a massive earthquake in Miyagi Prefecture, quake-proofing standards were made stricter so that new buildings would be able to withstand temblors of up to 7 on the Japanese seismic scale. At that point there were about 1 million condo units, and most were never properly upgraded. Until recently, there was never a law mandating quake-proofing for structures built prior to 1981, or for that matter prior to 1971, the first time quake-proofing standards were improved.

Since the Great East Japan Earthquake on March 11, 2011, both the central and local governments have promoted quake-proofing of existing buildings, but the response has been poor, despite the fact that some local governments, such as Tokyo’s Toshima Ward, mandate the improvements under penalty of law. The chief obstacles are cost and consensus. Quake-proofing old buildings would set back each resident millions of yen. More importantly, though, since condos are collective enterprises, such decisions have to be arrived at by four-fifths of the owners in a building, and that sort of majority is difficult to obtain.

A recent series of articles in the Asahi Shimbun illustrates the difficulties of renovating old condos, using the example of a 12-unit building located near Meiji Park in Tokyo, which was built in 1957. In 1995, following the Great Hanshin Earthquake, one of the residents tried to rally his fellow owners to carry out quake-proofing work, but because there was no owners association it was difficult to do. Eventually, he brought in an outside management company to come up with a plan and help him establish an owners association.

They estimated that quake-proofing would cost between ¥60 million and ¥80 million, and combined with other repairs each owner would have to chip in ¥10 million. Finally, in June 2010 the association decided that it might just as well rebuild the condominium. Only two owners disapproved of this plan, so it passed the four-fifths test mandated by law. The association then brought in a developer, which designed a new five-story structure comprising 16 units. Since the association owned the land as a group, all they had to pay for was demolition and new construction. In addition, they would profit from the sale of the four additional units. In the end, each paid ¥28 million for a new apartment, which is well below the market price for that area of Tokyo.

Asahi presents this story as a successful example of rebuilding — but it is an exception. When rebuilding a condominium, the participation of a developer is essential, and most won’t get involved unless there is a guaranteed profit. So unless your condo is in a major city or near a busy train station, developers won’t be interested. Also, the land has to be big enough to accommodate a larger building so that extra units can help offset the cost of rebuilding.

In the case of the Meiji apartments, the capacity rate — meaning the amount of floor area that can be built on a given tract of land — was enough so that a taller building could be constructed. However, if capacity rates in a given locality are small, or there are height restrictions or guaranteed-sunlight laws that limit the size, then rebuilding becomes uneconomical. Other problems include residents who refuse to approve rebuilding and demand above-market prices to sell their condo to the other residents; as well as condo renters who refuse to move and so hold up the process.

Now that a huge number of buildings constructed during the big condo boom of the ’70s and ’80s are reaching their government-sanctioned sell-by date, the ruling Liberal Democratic Party is finally starting to understand these realities and has been working on legislation that would make rebuilding easier, such as reducing the portion of owners needed to approve rebuilding or increasing capacity rates. But as Homes Press points out, even if related laws are relaxed to encourage rebuilding it doesn’t mean it will happen, especially since, with the shrinking population, there isn’t much growth foreseen in the condo market.

It would be better to allow a third option, to “shift land usage,” as the article puts it. In other words, tear down the building, sell the land, divide the revenue among the owners, and leave. In most localities, they aren’t going to get much, but in any case the owners of these old condos are usually old themselves.

Several years ago we inspected a condominium that was built in the late ’80s by the successor to the Japan Housing Corporation. A good portion of the condos that have been rebuilt in Japan were originally constructed by JHC, because they usually have strong owners associations and enough attached land to justify rebuilding, but this particular complex was in a remote area of Chiba Prefecture far from the nearest train station. When we mentioned that the building would be due for renovation or rebuilding in 10-15 years, he said it should be no problem. We asked, what if we decided to sell rather than go through the rebuilding process? We doubted that we would be able to find a buyer. “In that case,” he said confidently, “we’ll buy it from you.”

Philip Brasor and Masako Tsubuku blog about Japanese housing at www.catforehead.wordpress.com.