The Australians buying Japan’s abandoned houses

A growing number of Australians are buying abandoned houses in Japan, known as akiyas, due to the country’s declining population, the high cost of housing in Australia, and the relative affordability of akiyas. The average price of an akiya in Japan is around \$100,000, compared to \$700,000 for an average home in Australia. Some Australian buyers are renovating akiyas and selling them for a profit, while others are keeping them as holiday homes or rental properties. The trend is seen as a win-win for both Australia and Japan, as it helps to reduce the number of empty houses in Japan and provides affordable housing options for Australians. The Financial Review North Asia correspondent, Michael Smith, explains it in a very interesting article.

The Australians buying Japan’s abandoned houses

Derelict properties in Japanese rural areas are being snapped up and renovated for as little as $10,000, but the new homeowners are doing it for love not profit.

Liam Mugavin could not believe his luck when he started searching for a historic Japanese farmhouse to convert into a design studio.

The 36-year-old furniture designer from Sydney found fertile hunting grounds in the abandoned villages just an hour’s drive from his home near the ski fields in the Japanese Alps.

Unwanted by the children of their elderly occupants once they die, hundreds of empty homes line the winding roads and abandoned rice paddies in Niigata prefecture. Many are boarded up and sinking into decay as roofs collapse and shoulder-high weeds take over.

While it took him years to make the connections which helped him find the property, Mugavin looked at only six houses before he landed on the 300-year-old structure that ticked all his boxes. Moreover, the house was free and the local authorities are paying him to tear it down and move it to the ski village where he already operates a hotel.

“It really is a dream scenario for me. I feel very fortunate. In Sydney, there is no way I could do anything like this. We were barely scraping by,” Mugavin says as he shows AFR Weekend through the two-storey house.

Japan has millions of empty homes, known as akiya, and the numbers are growing due to the country’s ageing population. Current estimates vary between 8 and 11 million.

It is a hard concept to fathom from a country like Australia where even the most remote real estate has value, but rural properties are almost worthless in Japan and start depreciating the second you buy one. Once their elderly occupants die, properties are often abandoned because their children, who have usually moved to a big city, have no personal interest or financial incentive to maintain the house.

While the number of empty houses still outstrips demand, there has been a surge of interest since the pandemic among both foreigners and young Japanese people in preserving older homes known as kominka.

“The culture is being lost. Villages like this, there is no getting around it, people just aren’t moving here. But there is a movement that has been accelerated by COVID-19 of young people who want to do organic farming, and they want to learn how to restore buildings themselves,” Mugavin says.

The 145-square-metre house (which was empty for 15 years) clearly has potential. The high ceilings, thatched roof, earth floors where horses were once stabled, bamboo latticework, and thick curved beams made from local trees (complete with a natural curve from the weight of winter snow) speak to the house’s history, which dates back to Japan’s Edo period. “There is so much history in here. The structural integrity is good. Apart from the metal windows, it is built with all natural materials.”

It is unlivable now, which is partly why Mugavin got it free. The home’s elderly owner and her son moved to the city years earlier. It was cheaper for them to give the property away than to pay to have it demolished or removed.

In July, the entire structure will be dismantled and transported 50 kilometres away to the ski town at the base of Mount Myoko where Mugavin has already renovated another smaller house he bought for 700,000 yen ($7000).

When rebuilt, the farmhouse will be turned into a studio, offices and a communal workshop for woodworkers.

Mugavin left Sydney – where, like many of his generation, buying property was challenging – with his Japanese-born wife five years ago. He and a cousin opened a boutique hotel in the ski fields. He also continues to design furniture and works in interior design but renovating kominkas has become a passion project. COVID-19 turned out to be an opportunity rather than a setback after he successfully applied for a 20 million yen ($200,000) subsidy being offered to small businesses affected by the pandemic. He says it will cost him another 40 to 60 million yen to complete the workshop project.

Japan’s extraordinarily cheap housing market, which is accessible to foreigners, sounds too good to be true, and in many ways it is. Mugavin speaks Japanese and spent more than three years building up the networks and a relationship with a local carpenter Yamagishi San who specialises in finding and relocating kominkas. He is also heavily invested in Japan in a way that many foreign buyers could not be if they were travelling in and out on tourist visas. The hidden costs are also high, and it is difficult to re-sell property in Japan for a profit.

“There has been a lot of attention about free akiya but nothing is truly free. It is not straightforward. It is all about relationships. You can’t just walk into a village and look for a free house. You need to be able to speak Japanese and make connections and have a network of people,” he says.

Steve Cunningham, who upped stumps from Tasmania’s west coast to move to Japan in 2019, agrees. He says he knows of many starry-eyed foreigners who snapped up the biggest house they could find but later abandoned them because of all the challenges involved. He also says many foreigners do not realise that renovating a property in Japan has to be a passion project because it will start depreciating the minute you buy it. “In Japan, you are buying a car that doesn’t drive,” he says.

Cunningham and his Japanese-born wife Kuminko were keen to move to the lush foothills of Nagano, north of Tokyo; the climate and landscape reminded them of Tasmania.

With the help of the local authorities, they found a house which had been abandoned for 50 years in a prime spot on just over a hectare of land. The grand house cost him $US28,000 ($42,000) and he spent $US45,000 on renovations including a small carpark out front.

Cunningham, who worked as a chef among other jobs in Australia, installed a wood-fired pizza oven which dominates the entrance of the house, which now doubles as a popular cafe. When he is not farming vegetables from the plot of land out back or working on demoshing other houses, the outgoing Cunningham serves up pizzas and panini, teaches English to the locals in the evening, and documents rural life in Japan on YouTube.

Cunningham found his property though the local Nagano government authority, which has set up a program to help residents find properties as part of efforts to get more people to move to the area. They direct many to so-called akiya banks, where local governments list abandoned properties for sale.

Cunningham says the biggest challenge is sifting through the “trash” being offered for sale online and finding a house with potential in an area with good transport links which is not in decline. He says prospective buyers are also vetted by the owners to ensure they won’t sully their family name by causing problems for the neighbours.

“If you are a ratbag they won’t sell you the house at any price. People don’t want to burden their neighbours. People living in Tokyo [who own the house] don’t care about getting $20,000 but they care about someone buying the house.”

Takashi Miyamoto, an official at the Nagano City government who helps residents find property in the area, says there is growing interest from foreigners and Japanese people in quality homes, which can get snapped up quickly when they are advertised.

He says the Nagano City government is also offering subsidies of 1 million yen to renovate an old home to revitalise the local area. While Nagano has an advantage because it is near a shinkansen (fast train), offering easy access to Tokyo, many towns in rural Japan are struggling to survive as the population ages.

“We are encouraging people to register their properties with the akiya bank, but it is complicated and time-consuming and often makes people have second thoughts, especially if the landlord is elderly,” he says during an interview in Cunningham’s cafe.

The Japanese government is worried about the increase in empty and derelict problems which local authorities warn are unsightly and a hazard and is considering taxing owners who do not maintain them properly. Earlier this year, the city of Kyoto announced it would start imposing a tax of 0.7 per cent on the value of houses not being used from 2026.

There are no restrictions on foreigners buying property in Japan, although they cannot take out a mortgage. However, getting a visa to live permanently in Japan is notoriously difficult.

For many Australians already living in Japan on working or spouse visas, they just want a comfortable family home without any commercial connections.

Jaya Thursfield, 47, originally from Melbourne, has become a YouTube sensation after videos of his home renovation project, located 45 minutes from the centre of Tokyo, went viral.

The IT contractor and his Japanese wife Chihiro moved to Japan from London in 2017. They were keen to buy or build a home with a big backyard their two sons could enjoy, like the one Thursfield had grown up with in Australia. The property they found surpassed his wildest real estate dreams.

“It looked like a castle. I thought, ‘I have to have this place’. It ticked all the boxes,” Thursfield says over coffee in the modern kitchen of the spacious house in Ibaraki Prefecture. He recalls the day they entered through an overgrown garden to peer into the property. It is dominated by a separate gable roof over the front entrance, which itself looks like a Buddhist temple.

He bought the 200-metre square house for 3 million yen ($31,000) at an auction in 2019 and estimates he has spent at least $US150,000 on renovations (with more work still to do, including insulating a second-level upstairs). Old receipts show the house was built in 1989 for about 50 million yen, at the height of Japan’s economic boom when “banks were throwing money at people”. The property was abandoned for years after the elderly owner passed away and was left unattended by his children.

When Thursfield moved in, the house was littered with rubbish, old clothes and personal possessions including furniture. While he had never renovated a house before, he set to work with the help of a carpenter to knock out walls and transform the dilapidated property into a stunning contemporary home.

Polished wooden floorboards and a wood-burning stove were added to give a modern feeling to a traditional Japanese house which still includes the engawa – an open corridor constructed around the outside of the house – keyaki wood beams and fusuma sliding doors.

“I never thought I would live in such a house. In Japan, people just want newly built houses, and they would knock down an old house like this,” says Jaya’s wife Chihiro. She works from the house, which is close to where she grew up.

“You go to other countries and these old houses are sought after and valued and part of the rural landscape. People don’t seek that out so much in Japan. There is no incentive to look after a house. If you inherit your parents’ house, rather than pay to knock it down or maintain it, it is easier to leave it. Property taxes in rural areas are so low,” Thursfield says.

While his YouTube channel, Tokyo Llama, is an enticing glimpse into what can be achieved for relatively little money in Japan compared to Australia, Thursfield has some words of warning for anyone in Sydney or Melbourne thinking about snapping up a property in Japan.

“You buy a place like this because you will be living here for the rest of your life,” he says. “Once the house is no longer new, it depreciates. If you move on you have to take a financial hit. If you look at it from an Australian property investment point of view, you are going to lose money.”

You can see the pictures and read the article in this link.