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> When the economy was growing like crazy in the 80s, Japan had the most expensive real estate on the planet, and the same zoning they do now. Are you sure? Fr

by ceras 10y ago

> When the economy was growing like crazy in the 80s, Japan had the most expensive real estate on the planet, and the same zoning they do now. Are you sure? From Financial Times[1]: > During the 1980s Japan had a spectacular speculative house price bubble that was even worse than in London and New York during the same period, and various Japanese economists were decrying the planning and zoning systems as having been a major contributor by reducing supply,” says André Sorensen, a geography professor at the University of Toronto, who has written extensively on planning in Japan. ... > "To help the economy recover from the bubble, the country eased regulation on urban development," says Ichikawa. "If it hadn’t been for the bubble, Tokyo would be in the same situation as London or San Francisco." [1] http://www.ft.com/cms/s/0/023562e2-54a6-11e6-befd-2fc0c26b3c60.html http://www.ft.com/cms/s/0/023562e2-54a6-11e6-befd-2fc0c26b3c... * * * Edited to add: To your first point, if you restrict your consideration of Japan to Tokyo, you see the largest metropolis in the world with a growing population -- other cities in Japan are shrinking, but Tokyo is growing, yet Tokyo prices are steady. I'm not sure about its economic situation, but I wouldn't be surprised if Tokyo's economy was stronger than other parts of Japan. Regardless, it's important information that Tokyo alone is building more housing than the entirety of California (source: same FT article).

andy_ppp 10y ago
It's really difficult I imagine to attribute either planning laws or declining population and a poor economy as being exclusively the cause. Very interesting article none the less! I find it a strange effect of the London housing market that it benefits property developers to under deliver in house building as the supply and demand situation will, even with brexit, mean increasing house prices. What can be done to get the incentives right?
kiba 10y ago
Unfortunately, while Japan does a great job on housing, they still experienced the lost decade.
- twblalock 10y ago
  And yet, during the lost decade, standards of living increased, and the highest unemployment rate ever recorded was only 5.6%.
  - mc32 10y ago
    I don't know about you, but I'll take our measure of 5.6% over their measure of 5.6% any day.
    - buster 10y ago
      Can you explain, please?
      - mc32 10y ago
        You can take a look at this: http://lipperalpha.financial.thomsonreuters.com/2014/09/news-charts-japans-hidden-unemployment-problem/ http://lipperalpha.financial.thomsonreuters.com/2014/09/news... Basically, underemployment, wage deflation, people leaving the workforce, rise in part-time labor, fall in full-time employment.
twblalock 10y ago
> I wouldn't be surprised if Tokyo's economy was stronger than other parts of Japan The GDP of the Tokyo metropolitan area is about 1/3 of Japan's total GDP. The country is weighted toward Tokyo like the UK is weighted toward London. In the US, the center of finance is New York, the center of entertainment is LA, and the center of tech is Silicon Valley. In Japan, Tokyo is the center of all of those things, as London is in the UK.
- AlphaSite 10y ago
  At least in the U.K. it's entertainment industry is mostly decentralised and located away from London, more in Wales, N. Ireland and Milton Keynes.
- rangibaby 10y ago
  and Nagoya is Japan's Detroit if Detroit hadn't become Detroit.
  - twblalock 10y ago
    Sort of. Toyota and its suppliers are there, but Honda, Nissan, and Mazda are not. Detroit was unique because it was the home of every major American car company: Ford, GM, Dodge/Chrysler, and AMC.
psykpsyk 10y ago
1980 was 36 years ago, far far away from he 20 years GP mentioned. You should do your math before varying to contradict someone and ending up confirming what they said...
irq11 10y ago
Yes, I'm sure. First, that FT article is terrible. It uses a "desirable 20 sq km slice" of Tokyo as a proxy for the city's population growth, but in reality the city's population growth, by its own accounting, was flat from 1977-1997: http://www.metro.tokyo.jp/ENGLISH/ABOUT/HISTORY/history03.htm http://www.metro.tokyo.jp/ENGLISH/ABOUT/HISTORY/history03.ht... Even since 1997 Tokyo's population hasn't grown quickly, going from 12M to 13.5M (12.5%) in 18 years (0.65%, annualized). By comparison SF is a boomtown, having grown by nearly 6% since 2010 (1.2%, annualized; that's nearly twice the rate of Tokyo over the same period): http://sf.curbed.com/2015/2/4/9995388/sfs-population-is-growing-way-faster-than-its-housing-stock http://sf.curbed.com/2015/2/4/9995388/sfs-population-is-grow... Instead, the FT article manufactures a lie by explicitly comparing the population growth in one ward of Tokyo (again, Minato) to that of all of SF over 20 years. It uses this unfair comparison to conclude that SF is growing more slowly than Tokyo. It's possibly the most egregious example of cherry picking I've seen in the press in years. So the FT article is not to be trusted. But what about that "astonishing fact" about housing starts being more numerous in all of California? Turns out, it's way less astonishing when you realize that Japanese homes are essentially disposable - the average lifespan of a Japanese home is 38 years (compared to 100 in the US). There's no market for used homes in Japan, and homes become worthless after 15-30 years: http://freakonomics.com/podcast/why-are-japanese-homes-disposable-a-new-freakonomics-radio-podcast-3/ http://freakonomics.com/podcast/why-are-japanese-homes-dispo... A culture of disposable homes is obviously going to have more construction than one where homes are treated as investments. But what about this zoning change that fixed everything, and made Japan safe for development again? Oh...that law was passed in 2002, and it mostly had to do with encouraging re-development of blighted spaces in cities across Japan, as well as improving infrastructure and safety: http://www.toshiseibi.metro.tokyo.jp/pamphlet/pdf/udt2013english.pdf http://www.toshiseibi.metro.tokyo.jp/pamphlet/pdf/udt2013eng... It does some useful things - like establishing a class of apartments with no key money or ridiculous deposit requirements - but it's wishful thinking to suggest that this law, passed in 2002, suddenly made Tokyo real estate affordable. My argument stands. If you want to know why Tokyo land prices have stayed flat, look at the economy. Japan has been struggling to find growth for nearly two decades, its population is flat/declining, and it is struggling with deflation. Everything else is a detail.

by ceras 10y ago

andy_ppp 10y ago

It's really difficult I imagine to attribute either planning laws or declining population and a poor economy as being exclusively the cause. Very interesting article none the less! I find it a strange effect of the London housing market that it benefits property developers to under deliver in house building as the supply and demand situation will, even with brexit, mean increasing house prices. What can be done to get the incentives right?

kiba 10y ago

Unfortunately, while Japan does a great job on housing, they still experienced the lost decade.

twblalock 10y ago
And yet, during the lost decade, standards of living increased, and the highest unemployment rate ever recorded was only 5.6%.
- mc32 10y ago
  I don't know about you, but I'll take our measure of 5.6% over their measure of 5.6% any day.
  - buster 10y ago
    Can you explain, please?
    - mc32 10y ago
      You can take a look at this: http://lipperalpha.financial.thomsonreuters.com/2014/09/news-charts-japans-hidden-unemployment-problem/ http://lipperalpha.financial.thomsonreuters.com/2014/09/news... Basically, underemployment, wage deflation, people leaving the workforce, rise in part-time labor, fall in full-time employment.

twblalock 10y ago

> I wouldn't be surprised if Tokyo's economy was stronger than other parts of Japan The GDP of the Tokyo metropolitan area is about 1/3 of Japan's total GDP. The country is weighted toward Tokyo like the UK is weighted toward London. In the US, the center of finance is New York, the center of entertainment is LA, and the center of tech is Silicon Valley. In Japan, Tokyo is the center of all of those things, as London is in the UK.

AlphaSite 10y ago
At least in the U.K. it's entertainment industry is mostly decentralised and located away from London, more in Wales, N. Ireland and Milton Keynes.
rangibaby 10y ago
and Nagoya is Japan's Detroit if Detroit hadn't become Detroit.
- twblalock 10y ago
  Sort of. Toyota and its suppliers are there, but Honda, Nissan, and Mazda are not. Detroit was unique because it was the home of every major American car company: Ford, GM, Dodge/Chrysler, and AMC.

psykpsyk 10y ago

1980 was 36 years ago, far far away from he 20 years GP mentioned. You should do your math before varying to contradict someone and ending up confirming what they said...

irq11 10y ago

Yes, I'm sure. First, that FT article is terrible. It uses a "desirable 20 sq km slice" of Tokyo as a proxy for the city's population growth, but in reality the city's population growth, by its own accounting, was flat from 1977-1997: http://www.metro.tokyo.jp/ENGLISH/ABOUT/HISTORY/history03.htm http://www.metro.tokyo.jp/ENGLISH/ABOUT/HISTORY/history03.ht... Even since 1997 Tokyo's population hasn't grown quickly, going from 12M to 13.5M (12.5%) in 18 years (0.65%, annualized). By comparison SF is a boomtown, having grown by nearly 6% since 2010 (1.2%, annualized; that's nearly twice the rate of Tokyo over the same period): http://sf.curbed.com/2015/2/4/9995388/sfs-population-is-growing-way-faster-than-its-housing-stock http://sf.curbed.com/2015/2/4/9995388/sfs-population-is-grow... Instead, the FT article manufactures a lie by explicitly comparing the population growth in one ward of Tokyo (again, Minato) to that of all of SF over 20 years. It uses this unfair comparison to conclude that SF is growing more slowly than Tokyo. It's possibly the most egregious example of cherry picking I've seen in the press in years. So the FT article is not to be trusted. But what about that "astonishing fact" about housing starts being more numerous in all of California? Turns out, it's way less astonishing when you realize that Japanese homes are essentially disposable - the average lifespan of a Japanese home is 38 years (compared to 100 in the US). There's no market for used homes in Japan, and homes become worthless after 15-30 years: http://freakonomics.com/podcast/why-are-japanese-homes-disposable-a-new-freakonomics-radio-podcast-3/ http://freakonomics.com/podcast/why-are-japanese-homes-dispo... A culture of disposable homes is obviously going to have more construction than one where homes are treated as investments. But what about this zoning change that fixed everything, and made Japan safe for development again? Oh...that law was passed in 2002, and it mostly had to do with encouraging re-development of blighted spaces in cities across Japan, as well as improving infrastructure and safety: http://www.toshiseibi.metro.tokyo.jp/pamphlet/pdf/udt2013english.pdf http://www.toshiseibi.metro.tokyo.jp/pamphlet/pdf/udt2013eng... It does some useful things - like establishing a class of apartments with no key money or ridiculous deposit requirements - but it's wishful thinking to suggest that this law, passed in 2002, suddenly made Tokyo real estate affordable. My argument stands. If you want to know why Tokyo land prices have stayed flat, look at the economy. Japan has been struggling to find growth for nearly two decades, its population is flat/declining, and it is struggling with deflation. Everything else is a detail.