The “akiya” phenomenon in Japan refers to the disproportionate number of vacant and abandoned homes, currently around 9 million, stemming from the country’s demographic crisis. This situation isn’t new. However, an unusual trend is emerging in the Japanese real estate market. Housing prices are continually rising. As such, many have turned to the opportunity to buy an akiya. The catch is that while these homes may seem “cheap,” they can end up being quite expensive.
I want an akiya. Rising house prices in Japan have led to an increased demand for abandoned houses, which have become a popular “budget-friendly” option for buyers. As a result, young people and families with limited budgets are particularly interested in acquiring these akiya properties.
Akiya houses are often minimally renovated and sold at half the price of a new house, or even given away for free in exchange for maintaining them. This has made them an attractive option for those looking to save money. In fact, the Japanese government encourages the use of these homes to prevent them from deteriorating further and to revitalize areas affected by depopulation and neglect.
The akiya business. Meanwhile, companies like Katitas have emerged as leaders in the market for abandoned houses. Katitas purchases vacant properties, renovates them while preserving original elements, and sells them with land included at an average price of around $106,500. This is about half the cost of a new home.
Katitas employs creative renovation approaches, such as modifying floor plans and adding parking spaces. Thanks to this approach, the company has sold 5,535 homes in the fiscal year that ended in March, nearly doubling its sales from a decade ago.
Giving away akiya. Another key player in this market is Zero Estate, which connects akiya owners looking to dispose of their properties at no cost with interested buyers. The properties are transferred with administrative support for a fee.
Despite many of these properties being in poor condition, the contract rate has reached 80%. Additionally, local initiatives offer subsidies to facilitate the purchase of these properties at zero cost. One notable example is the “Zero-yen Akiya Bank” program introduced in Kamiichi in Toyama Prefecture on the Japan Sea coast.
The issue of purchasing an akiya. However, the rising demand for these abandoned properties has brought to light several risks, particularly related to hidden defects that often go unnoticed. Between 2020 and 2022, the Center for Housing Renovation and Dispute Settlement Support received an annual average of 690 inquiries about issues such as leaks and faulty drainage systems. These problems were discovered after the purchase of the akiya homes.
In this context, Wataru Tochigi, the director of the NPO Japan Society of Home Inspectors, warns buyers to take a proactive approach in investigating the condition of properties before signing a purchase contract. Conducting detailed inspections can help avoid unpleasant surprises and ensure a safer investment.
A complex home renovation. While akiya properties can provide opportunities for those seeking quiet retreats, affordable housing, and renovation projects, they also come with additional risks and costs. Experts advise that these homes often require significant renovation, especially if structural repairs are needed, which can sometimes exceed the potential resale value in certain areas.
What’s more, there’s an inherent risk associated with old constructions. The akiya homes pose significant safety hazards, particularly because many haven’t received the minimum maintenance required for a long time. A study by the Japan Akiya Consortium recently highlighted the potential for collapse in the event of earthquakes, landslides, and extreme weather conditions.
Government programs. In Japan, there are approximately 9 million unoccupied houses. This prompted the government to amend the Act on Promotion of Special Measures against Empty Houses. Effective in 2023, this amendment eliminates tax reductions for poorly managed properties and requires the registration of inherited properties to prevent abandonment. The new law also increases the maximum brokerage fees to encourage better management and marketing of the akiya.
Additionally, the market for abandoned homes is steadily growing. According to the Yano Research Institute, the resale market for second-hand properties reached 41,000 transactions in 2022 and is projected to increase by 20% by 2030.
However, the lack of mandatory regulations for prior inspections remains a challenge. While private inspections can be conducted, they aren’t binding, which presents challenges for potential buyers.
Image | Jonas Gerlach
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