Measures for Promoting Liquidity and Increasing Value of Existing Houses

No.275
October 2006
Research FellowHidetaka Yoneyama

1. In the past, shortcomings in basic quality, which leads to short life spans and a continuing cycle of “scrap and build”, has been considered a problem area in Japanese houses. Yet, a look at demolition patterns in houses built after the 70s shows a decrease in the frequency of demolition, and recently the tendency has been towards increased longevity.
2. There has traditionally been a heavy emphasis on new construction with regards to the Japanese housing market. It is expected, however, that houses with longer life spans will start to emerge in the existing housing market. A new movement has also recently appeared, both on the demand and supply sides, which encourages greater liquidity in existing houses.
3. The basic quality of Japanese houses is traditionally deficient; as such, when liquidizing existing homes there is higher potential for growth in the pattern of sellers renovating before liquidizing, rather than liquidizing as is.
4. To further increase the liquidation of existing houses, it is necessity to accumulate information on the history of houses, to establish evaluation methods for existing houses, to develop taxation systems which will spur the acquisition of existing houses, and to provide financial aid to high quality programs which promote the liquidation of existing houses.

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