While the cost of housing is climbing in many global cities, the average middle-class family in Tokyo can still afford to buy a new, single-family detached home for $300,000. That’s right. The typical Tokyo starter home is a brand new three-bedroom. How many New Yorkers will ever live in their own three-bedroom home, much less buy one?
A new video from Life Where I’m From, a Youtube channel from a Canadian-Japanese family living in Japan, explains the multiple factors that keep Tokyo housing costs lower than you might expect. The first thing to note is that in Japan, housing isn’t an investment. It’s a place to live. The country’s slow population growth means that increases in property values aren’t guaranteed in the same way that, say, a Brooklyn brownstone’s would be. So there’s less speculation driving up the price.
The Japanese government also offers low mortgage interest rates locked-in for 35 years. So, for example, home-buyers can borrow $300,000 at an interest rate of 1 percent on a 35-year mortgage and end up with a monthly payment of just $850.
But zoning may be the real winner here. Japan’s zoning laws are national—so no local weirdness hampering construction and driving up prices. The system has 12 zones progressing from residential to commercial and industrial. Any buildings allowed in zone 1 are also allowed in the following zones. Basically: Housing can be built almost anywhere, even on extremely skinny or odd-sized parcels of land. This increases the amount of usable residential space and helps builders continue to meet demand, keeping housing costs under control.
Check out for the video for the full explainer.