Value of Second hand Mansions

[crew]

I read a lot about Japanese people preferring to buy new things, including houses and mansions. But looking at the prices for second hand mansions, it seems the prices aren't significantly cheaper than new ones (particularly those relatively new ones, say 2000 onwards), taking into account depreciation through aging. What I mean is, investment wise, it seems if you buy a new mansion and sell 10 years later, or if you buy a 2000 mansion and sell ten years later, the amount of depreciation would be the same. So the only disadvantage of buying new is the higher price point, but your exit would be proportional to your exit when buying a second hand one (less the risk of older infrastructure, etc.) This is not even considering the newer equipment that come with a new mansion which you will have to spend on if you were to renovate an old one.

In short, there seems to be no "premium" for buying second hand, investment wise. Don't know if I explained myself sufficiently.

[RetireJapan]

Probably depends on the local market. I get the feeling that Tokyo is completely different to other areas of Japan.

We bought our second hand manshon in Sendai for 9m yen, and it was over 30 new.

[crew]

How old was it when you bought it?

[TokyoTower]

From what I have read mansions lose roughly

- 15% after 5 years.
- 20 % after 10 years.
- 30 % after 15 years.

After 20 years they stabilize.

Is this similar to buying a detached house where after a few years the land beneath is the only thing that has value? When you buy a mansion you are only getting a small parcel of land in comparison with buying a detached house. However, a mansion is built from concrete and can supposedly last 100 years so perhaps the building does not depreciate as badly as a wooden structure?

Of course there are many variables. If you bought in a great location it would hold its value better.

[RetireJapan]

How old was it when you bought it?

25 years old

[crew]

Wow that is indeed a significant decrease, much more than the ones I have been studying in my neck of the woods, and also lower than the depreciation estimates above. Is it near a station at all?

[jcc]

Used manshon have become more acceptable recently and construction of new manshon is decreasing. There's now more used manshons on the market than new. This is a recent development(last few years)

As to depreciation rate, it's hard to compare. Rather than look at the original price and the modern price for a place(which will have changed due to both depreciation and the change in local value) you may want to compare similar manshon of the same size/same area but different year construction.

I think Ben's manshion dropping to 30% of its original value has a lot to do with him being in sendai Population growth in Tokyo, population decrease everywhere else drives prices

[RetireJapan]

Wow that is indeed a significant decrease, much more than the ones I have been studying in my neck of the woods, and also lower than the depreciation estimates above. Is it near a station at all?

Right next to one. 1-2 minutes front door to standing on platform.

Also 20m drive from the airport. It's an amazing location

[RetireJapan]

Used manshon have become more acceptable recently and construction of new manshon is decreasing. There's now more used manshons on the market than new. This is a recent development(last few years)

As to depreciation rate, it's hard to compare. Rather than look at the original price and the modern price for a place(which will have changed due to both depreciation and the change in local value) you may want to compare similar manshon of the same size/same area but different year construction.

I think Ben's manshion dropping to 30% of its original value has a lot to do with him being in sendai Population growth in Tokyo, population decrease everywhere else drives prices

Actually Sendai is doing well, as we had a population boom after the earthquake -hundreds of thousands of people moved here from outlying areas. Real estate prices went up slightly at that point.

But absolutely, I think Tokyo is a weird outlier within Japan.

[vapid]

My wife has a work colleague (Japanese citizen), who is looking to sell there second hand mansion. If my wife and I wanted to buy it, can it be done entirely in cash or can we get a loan from a bank and figure out how to transfer the title from him to us?

Would the same principle apply for buying a home from someone looking to sell?