From heyday to sunset
One of the peculiarities of the local market is that the price dynamics in Japan are measured based on fluctuations in the value of land, since housing prices exactly repeat these ups and downs.
The world-famous "Japanese economic miracle", which made the country one of the superpowers in the second half of the XX century, was reflected in the national real estate market. Up until the 1990s, prices were growing very actively. Thus, from 1970 to 1980, the value of land increased by more than 210% in the six largest cities and by 178% in the whole country. Over the next decade, land in Japan has more than doubled in price.
In 1991, a crisis broke out, which led to a huge number of bankruptcies and led to the flight of foreign investors from the country. One of the consequences was a sharp drop in real estate prices. They started to grow a little bit again in 2005, when the economy finally stabilized. In 2006, the increase in the value of land plots was 2.8%, in 2007 - 8.1%, and in 2008 - 1.1%. However, due to the global crisis of 2008, prices sank again: according to the Economic Institute of Real Estate of Japan, in 2009 the average cost of new apartments in large cities fell by 5%. In Tokyo, the correction turned out to be even more significant. Hundreds of companies operating in the real estate sector, including large Japanese developers, declared bankruptcy.
The government tried to solve the problems with traditional cash injections. In 2009, the State Development Bank of Japan established a fund for financing real estate purchase and sale transactions by real estate investment trusts (J-REITs). Funds were also allocated to support developers, the mortgage lending sector, and urban redevelopment projects.
Judging by the latest news, the most difficult period for the Japanese market is over. Thus, in the first quarter of 2010, Japanese investment trusts invested twice as much in real estate as in the same period of 2009.

Decadent, but expensive
Despite all the difficulties, Japanese real estate remains expensive and not quite affordable for foreign buyers. Even after a 5% drop in prices, at the beginning of this year, new apartments in Japan cost an average of $510,000.
In central Tokyo, prices for apartments that could be of interest to foreign buyers range from $7,500 to $15,000 per 1 sq. m. with an average area of about 70 sq. m. Renovated apartments of 83 sq. m with two bedrooms and one bathroom in the center of the capital are sold for about $ 740,000. Luxury housing is estimated to be about twice as expensive – from $ 15,000 to $ 20,000 per 1 sq. m
. Such high cost is simply explained. With a population density of 337 people per 1 sq. km, Japan is among the most densely populated countries in the world. At the same time, the amount of land suitable for construction is very limited due to the complex landscape, and architects are forced to design fantastic tall and narrow buildings on small patches of land. Moreover, due to seismic activity, construction is carried out according to special standards and costs more than usual.

Under the wing of a realtor
Formally, in Japan, any foreigner can buy and rent real estate. However, this requires either a residence permit or a guarantee from a Japanese citizen. Under the same conditions, a foreign buyer can apply for a mortgage loan from a Japanese bank, although the approval period, especially for non-residents, may be delayed.
Mortgage rates are low – from 1.5 to 2.75% per annum. The standard loan terms are 40-50 years, in some cases it is possible to issue a loan for 100 years, shifting the final obligation to pay off the bank to children and grandchildren.
The purchase and sale transaction takes place with the participation of realtors whose activities are regulated by law – up to the amount of remuneration. Each real estate agency operates in a strictly defined area of the city, so they do not have competition and struggle for clients.
Apartment buildings, as a rule, are divided into those where apartments are offered for sale, and those where housing is rented. Apartments for rent are small and not very high–quality, such houses are built without insulation, and the apartment doors often go directly to the street - there is only an external staircase attached to the facade. This housing is aimed at students, young childless couples, single employees.
Apartments with an area of 15 and often 10 sq. m are usually rented, the monthly fee is $ 500-800 and above. Apartments are rented, as a rule, with a minimum set of household appliances, but without furniture. Counting on rent, you should prepare three more amounts: a commission to the real estate agency, a pledge and a "reikin". This is a kind of "gift" to the owner of the apartment, which is given when filling out the contract and is not returned.
In the houses for sale, apartments are designed more for families. However, there is no central heating and hot water supply here either: the water is heated by gas, there are individual heaters in the apartments.
Who of the foreigners and for what purpose is buying a house in Japan? Apartments in Tokyo bring a good income by European standards – from 4.5% of the cost per year. However, rent here is most often a full–fledged business: a landlord can own an entire building with several dozen apartments.
As a rule, non–residents looking for real estate in Tokyo are expats from the USA, Germany, France, Britain. In recent years, there have been more buyers from China.
There are freehold and leasehold deals in Japan. As in the UK, with freehold, the owner, together with the apartment, receives part of the land on which the building stands, with leasehold, only the apartment becomes the property. Foreigners prefer freehold, and if we are talking about an apartment in an old house, the price of land can be up to 90% of the total transaction price. With leasehold for the same money, the buyer receives a more spacious housing, while the lease on the land is issued for a period of 50-60 years. Some new projects provide for renewable leases.