Seeing Ireland's future in current Japan market?

No one knows for sure how the Irish market is going to pan out over the next few years, but there will be a bottom and then a return to rising prices. There have been comparisons with the bubble and fall in Japan. With that in mind, and seeing as I live in Japan and have on occasion considered buying here, I’ve been looking at trends here. I thought this may be of interest.

Here’s a graph for the prices per sq. m. of one address in one of the more upscale areas of Nagoya (Japan’s fourth city). It’s very typical of the area in general.

I’ve spent the morning looking at price trends in various parts of north-east Nagoya and beyond. The upward recovery from the bottom is something I see in almost every case. The degree of recovery is markedly higher in the more expensive areas (15-25% per year), lower or flat in the less fashionable areas. Those higher increases are similar to the jumps we saw in the bubble years but at this point could be more corrective and/or indicative of pent-up demand, speculation etc.

In the above case, there were declines for 14 straight years. The bottom was at about 39% of the peak (ie. a 61% drop) and roughly equal in nominal value to that of 20 years before (remember that Japan has had deflation rather than inflation since about 1991). The last three years have seen increases of 4%, 12% and 14%.

Better start saving your shekels Pinsters. You don’t want to miss the boat when the market “recovers” in 2020!!

Excellent stuff nagoyaoya.

Next time anyone says that property always goes up, or there’s never a bad time to buy property, I’ll be directing them here. Then I’ll be subjected to a serving of “Ireland is different”.

Buying assets in a bubble market is a very very bad idea if you get left holding the bag when the inevitable happens.

Another piece of wisdom that comes out of this is don’t try to catch a falling knife.

Better to miss the first 10% of the gains than cop the last 51% of the drop.

We are now in a Japan scenario and we can’t cut our interest rates, devalue our currency or even go on an inflationary public borrowing binge to cushion the fall.

I’d be looking for two consecutive years of real (not nominal) price growth in Ireland to indicate the bottom has been reached. A one year uptick from this point could easily be a bull trap or dead cat bounce after a decade long bubble.

Oh, there’s loads more where that came from!

By the way, and it is comparing apples and oranges I know, but the land price for the property I mentioned above is now at about ¥240,000 per square meter, which is about 1,500 Euro. I can find references to prices per sq. m. in Dublin, but that is for a building rather than the land itself.

Houses in Japan are not built to last - I think the average lifespan is 30-40 years - and the real value is in the land. That’s why any comparisons are done using land prices rather than those of houses/apartments.

That said, the price of a typical family house around here is about ¥45 million, or about 280,000 Euro. It will typically have around 100 sq. m. floor space and e built on a plot of roughly the same (ie. parking space but no garden and little separation from neighbours). A good-sized new house with a garden in a good neighbourhood will definitely put you around the magical “1-oku” or ¥100 million barrier (about 625,000 Euro).

What’s the average income? Also mortgage rates must be pretty bloody low if interest rates are 0.5%.

Must be nice to be paying off gobs and gobs of principal right from the start of the mortgage…

I can give you national averages, though the major cities are obviously a fair bit above the mean figures. These figures are from the government’s statistics bureau.

The average monthly household income for those working is ¥453,482 (about ¥5.4 million, 34,000 Euro annually). Average monthly spending is ¥342,868 (about ¥4.1 million, 26,000 Euro). The average household has about ¥15 million in savings. The ratio of working women is relatively low so dual-income households are far fewer than in Ireland.


Home ownership: 71% (of which about 24% have a mortgage). The average home size is 104 sq. m. (about 90 sq. m. in the 3 major cities). Remember that these figures are probably skewed by large houses in rural areas where land is often dirt cheap.

By the way, to put the above salary figures in perspective, the average backpacker that arrives in Japan to teach English can expect to make around ¥250,000 a month. Enough for a singleton to get by on in Japan but only equivalent to about 1,560 Euro a month. It used to be that you came to Japan to make some easy money. I know several people that came here around the same time as me (late 80s), worked hard teaching, saved as much as they could and bought a house in cash in the UK and Ireland. I was too focused on being young and single to do anything so responsible and far-sighted as that! And deflation here combined with inflation at home and the Euro-Yen rate mean this is just not possible anymore.

More’s the pity.

I’m going to use this opportunity to repost these excellent Japanese mortgage ads

how long has it been since anyone in Irish media presented mortgage as a burden rather than a get rich quick scheme?

I notice that company (who’ve moved to a new website/URL) no longer offer loans to “gaijin” (a, some would say, derogatory term for non-Japanese) unless they have permanent residency status.

Look at their site and you’ll see that they say their interest rate numbers are just a “guideline” and that they vary by property and customer. The interest rates quoted vary from 2.21% (5-Year Fixed Rate) to 4.84% (35-Year Fixed Rate). … terestrate

Baka Gaijin

wow, imagine getting a 35 year fixed rate from any irish bank…

Temekoso bakayarou! :wink: :wink:

Having been bitten by double-digit mortgage rates in the past in the U.K., I never take for granted that they won’t happen again.