[SECProto]

> Who wants to have a mortgage on a house that is going down in value every year?

I do. That's how housing works in Japan - you buy a house to live in, not to save money or invest. Older houses have lost their value (largely due to perceptions of danger in old housing stock - until the last decade or so, increasing understanding of earthquake/tsunami safety meant that houses wouldn't meet current building codes)

That (combined with adequate housing stock, less zoning restrictions, and negative population growth) means that even in the biggest cities, housing is fairly affordable. You buy a house because you want the control and the permanence that comes from owning a house.

[Beldin]

> I do. That's how housing works in Japan - you buy a house to live in, not to save money or invest

Something I don't understand: if there is real deflation, your buying power increases if you wait. In this case: wait a year, get a nicer house for the same price, or pay significantly less for the current house. So even if you're not buying the house as an investment, waiting would improve your situation as a buyer. The more you wait, the better for you.

How do you ever get to actually buying a house in such circumstances?

[danenania]

The same reason you ever get to actually buying a computer, tv, or smartphone even though you know they'll keep going down in price if you wait.

[ford_o]

On this note, I have always heard that Japan is in horrible situation because of deflation. Is that actually true?

[danenania]

I think it depends what you measure. If you only look at metrics like GDP per capita (in USD), Japan might seem to be doing poorly.

If you look at metrics that actually matter, like quality of life, income inequality, education, crime rates, public infrastructure, life expectancy, etc., it's up near the top--and is certainly doing far better than the US in many important areas.