Why Houses Lose Value in Japan (but Land Doesn't)

Land versus building: the rule that governs value in Japan

In the West we say "a house"; in Japan, people always think in two separate assets: the tochi (tochi, the land, the ground) and the tatemono (bâtiment, the structure, the building). The advertised price of a detached house — a kodate (一戸建て, detached house) — is never more than a sum: land value + building value. This distinction is not academic: it decides everything, from the price you should pay to what you get back on resale.

The rule fits in one line: in Japan, the building depreciates, the land endures. Unlike in much of the West, where a fine older home often gains value, a Japanese building loses its worth mechanically, year after year, until it is worth nothing on paper. Conversely, in sought-after cities the land stays scarce and expensive. A foreign buyer who ignores this split risks paying a new-build price for a melting asset — or, on the contrary, spotting the bargains locals know well.

This logic underpins much of our other guidance: it explains why new builds lose 10-20% on delivery, why vacant houses (akiya) sometimes sell for the land alone, and why a well-located plot is often the best asset. To lay the groundwork for any purchase, start with our complete guide to buying property in Japan.

Why the building depreciates to almost zero

Four forces combine to erode the value of a Japanese building.

1. Physical ageing (keinen rekka)

The keinen rekka (経年劣化, time-related wear) of a wooden house — the dominant material — is real: humid climate, earthquakes, typhoons, termites. The market has priced in a short useful life and codified it in tax law through the statutory useful life, the taiyō nensū (耐用年数, legal depreciation period). On that precise tax point, see our dedicated article on property depreciation in Japan.

2. Seismic obsolescence

Every revision of the earthquake code makes older stock less desirable. The great dividing line is June 1981: before it, the old standard kyū-taishin (kyū-taishin); after it, the new standard shin-taishin (shin-taishin, new earthquake-resistance standard), far safer. An older building is discounted and harder to resell — we cover this in our guide to the 1981 seismic standard.

3. The cult of the new and "scrap and build"

Culturally, the Japanese buyer favours new or nearly new. Many old houses are bought to be demolished and rebuilt: you then pay only for the ground. This is the famous "scrap and build" model.

Building lifespan by structure

Structure	Tax useful life (taiyō nensū)	Market value of building near zero around
Wood frame (mokuzō, mokuzō)	22 years	20-25 years
Light steel (tekkotsu, 鉄骨造)	19-34 years (by thickness)	30-40 years
Reinforced concrete (tekkin konkurīto, 鉄筋コンクリート)	47 years	45-60 years (better preserved)

Remember this: to the market, a wooden house older than 25 years often has a building worth almost zero. That is not necessarily a bad deal — it simply means you are buying land first.

Why the land, by contrast, holds its value

Against the wearing building, the tochi (the ground) is a non-reproducible asset. In sought-after cities it is scarce, hemmed in by Japan's mountainous geography, and supported by the pull to the metropolises: people and jobs concentrate in Tokyo, Osaka, Nagoya, Fukuoka. That is where land value holds, or even rises.

Two official benchmarks let you track that land value:

• The rosenka (rosenka, roadside land value) published each year by the tax agency (NTA, Kokuzei-chō): the basis for inheritance and gift tax, and an excellent street-by-street barometer of the ground.
• The chika kōji (chika kōji, published land price) issued by the Ministry of Land (MLIT, Kokudo Kōtsū-shō): the official reference prices, freely available on the land information system.

The decisive nuance: not all land is equal

Beware a false lesson: "land holds its value" is true in tight markets. In the countryside, land too depreciates, sometimes sharply, driven by depopulation. The vacant-housing rate has passed 13% nationally in the government housing survey (e-Stat), with far higher rural pockets. This is the whole point of demographics applied to property: land value follows accessibility (a station within 20-30 minutes, shops nearby). For a region-by-region picture, see our analysis of Japan property prices in 2026.

Breaking down a price: how much land, how much building?

Since a price = land + building, being able to break down a listing is an expert reflex. Three sources give you the land share:

1. The plot area × the local rosenka (adjusted, as the rosenka is worth about 80% of market price).
2. The assessed value — kotei shisanzei hyōkagaku (kotei shisan-zei hyōka-gaku, the property-tax base), which already splits land and building. It drives the property tax calculation.
3. Plain common sense on age: the older the house, the closer the building share tends to zero.

Here is the typical land/building split of a wooden house as it ages (orders of magnitude; varies greatly by location):

Building age	Land share	Building share	What you are really buying
New (0 yr)	≈ 50%	≈ 50%	A house about to depreciate
10 yr	≈ 60-65%	≈ 35-40%	Still building left to write off
20 yr	≈ 75-85%	≈ 15-25%	Mostly land
30 yr and over	≈ 90-100%	≈ 0-10%	Almost purely the ground

Listing vocabulary itself betrays this reality: a property advertised as furuya-tsuki tochi (古家付きtochi, land with an old house) is sold at the land price, the house treated as worthless or fit for demolition. A sarachi (更地, bare land) is already cleared. Reading these terms is part of the art of decoding a Japanese property listing.

Worked example: two properties, same price, opposite fates

Nothing beats a numbered example. Take two houses each sold for ¥30M (≈ €200,000), bought in cash, and compare their likely value in 15 years (~¥150/€).

Criterion	Property A — tight Tokyo suburb	Property B — declining fringe
Purchase price	¥30M (≈ €200,000)	¥30M (≈ €200,000)
Building age	30 years (wood)	5 years (wood)
Land share	≈ 85% → ¥25.5M	≈ 30% → ¥9M
Building share	≈ 15% → ¥4.5M	≈ 70% → ¥21M
Building in 15 years	≈ 0 (already written off)	Heavily depreciated → ¥3-6M
Land in 15 years	Flat to +10% → ¥26-28M	Falling (depopulation) → ¥7-8M
Estimated value at 15 years	≈ ¥26-28M	≈ ¥10-14M

Same outlay, opposite fates. Property A has already "purged" its depreciation: you mostly bought scarce land, which holds. You can let it as is, renovate it, or demolish and rebuild — the underlying asset stays solid. Property B, tempting because it is recent, will shed most of its value as the building wears and the population recedes. It is the most concrete demonstration of the land/building rule.

Before any purchase, price your own scenario with our yield simulator, and check the true weight of the purchase costs (always under 6%) in your entry budget.

What the land-versus-building rule changes for your strategy

Well understood, this logic becomes a decisive edge. Here is how to use it.

Favour "land-rich" properties

For a detached house, look for a high land share in a well-served area: you are buying the asset that holds. An old building is a bargaining chip, not a flaw, as long as the ground is good.

See akiya as land plays

Many akiya (vacant houses) are worth only their land. The right question is never "is the house pretty?" but "does the ground's location have a future?" An akiya near an active station can be an excellent land deal; the same one in a depopulating area is a trap.

Bare land or land with an old house?

Demolition costs money (often ¥1.5-4M for a wooden house, i.e. ≈ €10,000-27,000) and raises the property tax (bare land loses the "residential" abatement). Buying a furuya-tsuki tochi and demolishing yourself can be cheaper than a cleared sarachi. Our guide to buying land in Japan covers zoning and constraints.

The exception: concrete and premium locations

Two cases partly escape the rule. First, the concrete condominium — the mansion — whose structure lasts 47 years and more, and whose central-city land share supports the price. Second, ultra-premium locations (Ginza, Shibuya, central Kyoto), where land scarcity overrides everything. These assets hold their value far better — and are often the profiles found in Our gems, our curated selection of opportunities.

Common mistakes to avoid

• Paying top price for a recent house in a declining area. The new building will depreciate and so will the land: a double loss. This is Property B in our worked example.
• Believing "land always holds its value". True in tight cities, false in the depopulating countryside. Check the local demographic trajectory.
• Confusing tax depreciation with market value. The taiyō nensū is an accounting tool; real value depends on location and condition, not age alone.
• Overpaying for an old house's "character". If the market values it at land price, do not pay for charm at new-build price — unless it is a deliberate heritage project.
• Overlooking demolition cost. It burdens the budget of a rebuild project and shifts the land/building equation.
• Forgetting the seismic standard. A pre-1981 building is discounted and hard to resell: factor it into the price, as explained in our guide to the 1981 standard.

Conclusion: buy the ground, not just the walls

The Japanese rule is counter-intuitive for a Western buyer, but liberating once grasped: the building depreciates, the land makes the value. A price is not a single number; it is the sum of an asset that melts and an asset that lasts. Your job as an investor is to pay the fair price for the building (often near zero past 25 years) and the right price for the ground — targeting locations whose land value will hold.

To turn this principle into a real purchase, read our complete guide to buying in Japan, price your project with the simulator, browse Our gems, and if you want an expert bilingual eye on the land/building breakdown of a specific property, discover our personalised support and our past projects.

Frequently asked questions

Why do houses lose value in Japan?

Because both the market and the tax system treat the building as a wearing asset: wood decay, seismic obsolescence at every code revision, and a cultural preference for new. A wooden house is fully written off in 22 years and is then worth almost nothing: you are mostly buying the land.

Does land appreciate in Japan?

In tight cities (Tokyo, Osaka, Nagoya, Fukuoka), yes: the ground is scarce and supported by urban concentration. In the depopulating countryside, land can instead depreciate. Value follows accessibility: a station within 20-30 minutes and shops nearby.

How long does a wooden house hold its value?

In market terms, the building of a wooden house trends to zero between 20 and 25 years. Light steel holds 30-40 years, reinforced concrete 45-60 years. Past those thresholds, most of the value sits in the land.

Should you buy new or second-hand in Japan?

For an investor, second-hand offers more value: new builds lose 10-20% on delivery, then depreciate. A well-located older property has already depreciated, and you are mostly buying land that holds. See our new-or-old article.

What is land with an old house (furuya-tsuki tochi)?

It is a property sold at the land price, the existing house treated as worthless or fit for demolition. The term signals you are paying for the ground. Already-cleared land is called sarachi (bare land).

How can I find out the land value of a property?

Cross-check three official benchmarks: the rosenka (roadside land value, tax agency), the chika kōji (published land price, MLIT), and the property-tax assessed value, which already splits land and building. The rosenka is worth about 80% of market price.

Does the land-versus-building rule apply to apartments?

Partly. A concrete apartment (mansion) depreciates more slowly (47-year structure) and includes a land share that, in central areas, supports the price. Premium locations also hold their value far better.