Japan's Unconventional Solution to the Housing Crisis

housing crisis a term that today defines life in almost any major city from America to Europe and Asia owning or even renting a property is becoming unaffordable even for the middle class and no one seems to be able to do anything about it but that's not the case here in the world's largest urban area housing almost 40 million people in Tokyo even though the city itself is bigger than New York and its population is growing just as quickly somehow Tokyo manages to avoid a crippling housing crisis and compared to any other pure City including London Singapore or even Shanghai rent and property prices in Tokyo are incredibly cheap so much that Tokyo has been called the world's last big city with affordable housing and that's not a coincidence but a result of a unique Japanese approach to urban planning that's completely different than in any other country so how does Tokyo manage to stay so big and so affordable at the same time and why aren't we doing the same thing everywhere this is how Tokyo selfed housing but first let's establish how cheap Tokyo actually is because it's not a minor difference according to love bro University Global City ranking these are the nine most economically important cities in the world and compared to every single one of them Tokyo is by far the most affordable both in terms of property prices and cost of rent Tokyo is much cheaper than London or New York but it's also cheaper than Shanghai and Beijing even though average wages in both of the Chinese cities are much lower than in Tokyo and it's cheaper than Singapore even though Singapore has been praised for its affordable housing in other words compared to any other Global City Tokyo is dirt cheap and while you might be thinking that this would be explained by Japan's population crisis that's not actually true while the Japanese population has slightly decreased in the past 20 years the size of Tokyo city which makes up about 1/3 of the entire urban area has been going up and in the last two decades it added just as many people as London or New York so how does Tokyo stay so cheap well the answer is both simple and complex at the same time the way Tokyo remains affordable is by simply building a lot more housing than other cities which might not seem that revolutionary after all it's what politicians in basically every Western Country have been promising to do for decades but the thing is that despite these promises most major cities are completely failing in actually doing that and unlike them Tokyo has been able to actually do what everyone else is just talking about thanks to the unique way of how Japanese cities are designed so how do they do it well there are three things that make Japanese urban planning different from almost anywhere else on the planet first Japan holds a first place in two specific categories it has the highest inheritance tax in the world and it has more earthquakes than any other country and as a result it has a unique approach to urban planning and architecture because houses in Japan have a higher risk of being damaged by earthquakes and because in order to pass down a house to your kids they would have to pay a 50% of its value in inheritance tax real estate in Japan is seen very differently than anywhere else rather than being an asset that will always appreciate in value over time and that you build to last as long as possible in Japan real estate is more like consumer goods just like you wouldn't expect a fridge to last forever houses in Japan are not built to last and people don't want to live in pre-owned buildings and so most houses have a pretty short lifespan of about 30 years after which they are usually demolished and something else is built in their place but now let me take a quick pause to talk about a sponsor of this video Masterworks as Japan where the stock and housing market have been flat for decades shows really well no investment has a guaranteed result and that's why it makes sense for everyone 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neighborhood is constantly changing and if there is a now bigger demand for housing than there used to be you can just easily tear down a few one-story houses and build something a lot bigger instead and then maybe downsize once again if the demand goes down but this wouldn't be really possible anywhere else which takes us to the second Factor regulation or actually the lack of It in America or Europe when a developer wants to build any kind of residential property there are hundreds of rules that regulate everything from number of parking spaces maximum density height percentage of green spaces and much more complying with all of them means that building anything is really expensive and it's almost impossible to build any kind of dense housing meaning that free space is used in a very inefficient way on top of that zoning regulations usually restrict what kind of housing can be built in one area and often only allow one specific type for example single family homes which leads to the existence of massive suburbs with no services but in Tokyo you don't really have any of those restrictions Japanese zoning laws encourage mix used zones meaning that you can have different kinds of housing in one neighborhood in buildings of different shapes Heights and sizes right next to each other something that would be never allowed in most places Across America or Europe and there's basically no regulation for how dense these neighborhoods should be how much parking they need or what these buildings should look like which is why in Tokyo you have so many houses that look like this and as a result Japanese zoning is able to use space a lot more efficiently and build a lot of housing in relatively small areas and finally unlike in much of the developed world Tokyo and the majority of cities in Japan don't really have nimes people who actively oppose any development in their local area and push for the strictest possible housing regulations and it's not just because of the different mentality the real reason why Japan doesn't have this phenomenon is because nism is well not allowed or to be precise in most of the world it's the local governments that decide what gets built and where because the job of these local governments is to protect the interests of local residents they are often motivated to block any new development in their area that the locals are usually not happy about but because that happens in every neighborhood the end result is that you can't actually build anything anywhere but in Japan this is decided on a centralized National level and Regional governments and local citizens don't really get any say in that matter in that way the decisions are made by people who are supposed to have the bigger picture in mind and who are tasked with providing enough housing for everyone rather than protecting the particular interests of people in one area and as a result they are a lot more development friendly and more housing gets built and in that way Japan effectively bypasses the nimit problem now of course there are downsides with higher density you don't get a lot of green spaces and Tokyo has much less of them than most big cities people have to put up with constant development and they can't really influence what gets built in their neighborhood but the bottom line is that by building so much Tokyo is one of the few major cities in the world that manages to remain affordable for everyone and it demonstrates that housing crises are not inevitable and that we can solve them by just building more but then why aren't cities all over the world taking an example from Tokyo well some of the things are probably not possible to reapply anywhere else it's unlikely that Europe would start demolishing all the historic bu buildings and replacing them with new development but many methods used in Japan that would enable building more housing thereby making it more affordable for everyone could be very well used almost anywhere else and so it's not that we couldn't use the methods it's that in most of the developed world for some reason we don't want to and while it's hard to say why my guess would be that it's because our relationship to real estate is completely different in Japan your house is a temporary product that's probably not going to be worth much in 30 years time but in most of the world your home is your most valuable asset the difference between being lower or middle class your retirement policy and the sign that you made it that we have all been sold that's why people who already have a property fight so hard against anything that could decrease its value like more housing in their area even though it's making it so much more unattainable for everyone else and if and how that could ever change well who knows

Channel: Explained with Dom

Views: 832,376

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Id: d6ATBK3A_BY

Length: 10min 5sec (605 seconds)

Published: Tue Oct 10 2023