[hudibras]

A couple reasons that don't get much attention are that a.) newly-constructed houses are relatively cheap and b.) mortgage rates are very good.

A normal, custom-built house in the suburbs of Tokyo can be constructed for somewhere between $120,000 and $250,000 (source: I'm shopping for a house now) which, at the current Japanese mortgage rates for a 35-year loan, translates into a $400-$800 monthly payment for the home construction.

This is on top of what you have to pay for the value of the land itself, of course. But if you're already paying $300k-$500k for the lot, then why not just knock down the old building and put up your own, perfect-for-your-family, architect-designed, house?

[mikekchar]

Ha ha. Where I live a lot is about $50K, so I sometimes find it a bit strange that people build a $2-300K house instead of living in the one that was there.

But you are also right about the mortgages. Rates are super low and you can get 20 or 30 year terms. So for example even for a 25 year term, Shinsei bank is offering less than 2%: https://www.shinseibank.com/english/housing/loan_kinri.pdf

It's completely insane. I keep telling my wife we need buy a house just to lock into the nearly free money. On the other hand, if the bank thinks this is a good deal for them, they must be forseeing some pretty bad economy in the future...

[mrhappyunhappy]

Nearly free? 58k interest on 240k borrowed over 25 years is not exactly nothing.

[mikekchar]

It is if you believe that interest rates will be above 2% in 5 to 10 years.