How Japan dodged a global housing crisis

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The biggest challenge is renting while trying to save for a deposit.

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Start with the great investor dream.

This podcast is recorded on the lands of the Awabakal, Darug, and Eora people.

G'day, Matt Bevan here.

So we

had a little incident at the weekend.

A mini January 6th episode at the live show at the Newcastle Prize Festival.

In part, it is my fault.

I seriously underestimated how many people would want to come and see the show, and it appears that the 348-seat conservatorium concert hall was insufficient.

There are a lot of people unable to get in.

And then one of those people decided to try and kick their way into the show by attacking the glass doors and then walking around the perimeter looking for alternative entrances.

Please

don't do that.

But if you weren't able to get in, I am sorry and I am glad that you didn't storm the conservatorium.

I would then have had to go to all the effort of running for president so that I could pardon you, and that would take a little while.

Instead, well, look, we're planning to do a second live show in Newcastle at another venue for people who couldn't get in.

I don't have the details locked in yet, but they will come soon.

If you want to be among the first to know, send an email to ifyoulistening at abc.net.au abc.net.au and we will send the information to you directly.

We are taking a couple weeks off from putting out new episodes to work on our special election series.

It's all about the role of social media in politics and how billionaires like Elon Musk are using it to influence elections all over the world.

In the meantime, Australian politicians are furiously crisscrossing the country in the lead up to the federal election in a few weeks.

And the cost of housing is one of the key battlegrounds.

So here's an episode from our archive all about a country that bucked the trend when it comes to housing affordability.

So how did they do it and is it something that we could do here in Australia?

Okay,

serious newsreader voice.

This is a story about property prices spiraling out of control.

For the majority of people, the property revolution has become more of a curse.

In Tokyo, Japan.

If you think it's a tough housing market in Sydney, take heart.

In Tokyo, Tokyo, it's a real estate chamber of horrors.

For example, take this young family.

The Kanemarus are just one of the many young families who've been forced far out of the city centre by high real estate prices.

Mr.

and Mrs.

Kanemaru have a baby daughter, big dreams and a mountain of debt.

They borrowed heavily to buy this two-bedroom apartment.

Current price, three-quarters of a million dollars.

The apartment cost more than Mr.

Kanemaru thought that he would make in a lifetime at his job in the city.

The typical Tokyo wage earner must commute two or three hours a day in trains which rarely afford the luxury of a seat.

Sounds familiar, right?

There's a growing sense of inequality between Japanese who own land and those who don't.

But here's the thing.

This isn't now.

This is Tokyo in the 1980s.

And yet, today, it's not like this.

Tokyo housing is, by the standards of big cities in wealthy countries, incredibly affordable.

It's proof that a housing crisis isn't inevitable, even if it looks that way to millions of desperate potential homebuyers in London, New York, Sydney, and the rest of the developed world.

In today's episode, how did Japan opt out of the global housing crisis?

And can we opt out too?

I'm Matt Bevan, and this is if you're listening.

Since the end of World War II, Australians have been chasing an idea that we call the Australian Dream.

This is the new country, this is the new country, this is the new country I would live anywhere else.

Our national monument might well be a suburban cottage on a quarter acre block.

The Australian Dream.

Owning your own home on a quarter of an acre block.

Perhaps with a pool.

Grass for the kids to play.

A patio for entertaining, a garden, and even a veggie patch.

And once upon a time, that was attainable.

Australia has the world's highest proportion of homeowners.

But in Australia, it's been getting harder to buy a home.

And it's not a recent problem.

It's been getting worse and worse for the last 60 years.

The problem of housing finance hits at all income groups.

But for those who earn less than £20 a week, the housing position is desperate.

Back in the 60s, like today, millions of young Australians rented one-bedroom apartments while saving up for a house and planning for a better future.

Oh, we do plan, it's like a dream.

You plan and you plan and you plan, you get nothing.

My husband's going to join the army trying to get a home that way.

By the 1980s, buying a house was becoming more and more difficult.

More and more young Australians are seeing that great Australian dream fading away.

And by 1985, we were in crisis mode.

New South Wales is in the grip of the worst housing crisis in 40 years.

If Sydney was in a housing crisis in 1985, what would you call the situation now?

It's so dire that it's spread to other cities as well.

I'm sure you've heard your fair share of doom and gloom about how expensive housing is today.

So let me give you one good example and then we can move on.

The best measure of housing affordability is how many years it would take to buy a median priced house if you spent your entire income on the house.

50 years ago, it was five years median salary in Sydney.

Now it's 15 years.

Why?

Well, we designed the economy to benefit property owners.

Now we could just build more houses, but a lot of people don't want more houses.

It's called being a NIMBY, not in my backyard.

But that's just the way it is, right?

This is how it's run in the US, UK, Canada, New Zealand, most of Western Europe, everywhere else that has a housing crisis at the moment.

But is there another way to run things?

Well,

prepare to have your mind blown, because we're going to talk about the history of town planning controls in Japan, and it doesn't get much sexier than that.

In a way, Japan's current system is thanks to a Stephen Bradbury-like situation.

A man who wasn't expected to become the prime minister got the top job because everyone else fell over in front of him.

Most Japanese prime ministers are moderate men who can find consensus, not guys who like rocking the boat.

But Yasuhiro Nakasone quite liked rocking boats.

In World War II, the boats he rocked were literal.

He was an officer in the Japanese Imperial Navy stationed in Indonesia.

He's remembered for, among other things, setting up a military brothel, a comfort station for his soldiers, something Nakasone felt comfortable writing about at length in his memoir.

But later in life, when talking about things like forcing women under military occupation into sexual slavery became much less publicly acceptable, he said that it was a board games club.

Changing his stance on big issues kind of became Yasahiro Nakasone's thing.

He went into politics soon after the war and built a reputation as a weather vane during the following three decades in parliament.

Mr.

Nakasone has been the heir apparent to the leadership for many years, but his sudden shifts of allegiance have made him enemies in his party.

He's also more right-wing than other contenders.

By 1980, he'd been passed over for Prime Minister so many times that he'd basically given up and settled into a new role as the Minister for Administrative Management, which sounds like a spectacularly boring job.

But while he languished in obscurity, his ideas about housing began to take shape.

You ever had a conversation with someone which ends with, well, if only they asked us, then all the world's problems would be solved?

Well, Agasone started having a lot of those conversations with one of Japan's most prominent businessmen, Toshiwo Doko.

Doko was in his 80s and was the head of Toshiba.

He was a classic Japanese businessman.

He was famously never late to work or absent a single day in 40 years.

He was good to his staff, but expected them to follow his instructions, and he wasn't a fan of the government getting in his way with taxes or regulations.

Doko and Nakasone spent months traveling travelling the country coming up with plans for how they'd totally revamp how the Japanese government worked if only they were given a chance.

Part of Nakasone's strategy was to make Doko seem like a wise, grandfatherly everyman.

A TV documentary was made about his home life featuring a, and I'm not kidding,

three and a half minute sequence of Doko and his wife eating breakfast and chatting.

Well, I say chatting

while munching on his sardines.

Doko and Nakasone worked incredibly hard for a year

and by the end of it they had a big comprehensive plan to completely upend how the Japanese government worked.

And lucky for them, in 1982, out of nowhere, the Prime Minister resigned and Nakasone finally got the top job.

Their plan was a neoconservative capitalist fantasy.

They threw absolutely everything they could get their hands on into the open market just to see what happened.

They sold the government-owned railways, tobacco companies and phone companies and used the revenue in infrastructure programs aimed at supercharging big business.

It went pretty well.

The poor little rich country is flush with money in search of a home.

And his plans won him fans overseas.

He, the US President Ronald Reagan and UK Prime Minister Margaret Thatcher, became a little neocon supergroup.

But despite the influx of cash, there was a downside.

Tokyo is a big and messy city.

It's unplanned, mostly low-rise, and crying out for redevelopment.

Land prices in Tokyo started to spiral out of control.

You're looking at the world's most expensive concrete jungle.

A place where even real estate agents can't buy a home.

Workers were forced to move to the fringes of the big cities.

For the majority of people, the property revolution has become more of a curse.

Never fear though, because Doko and Nakasone had a plan.

Starting in Tokyo, Nakasone asked councils to allow developers to build more housing.

The councils said no.

The people who voted them in didn't want massive development.

So Nakasone just changed the law.

Local councils now had no control.

Town planning was now national planning.

And his national plan was to give developers free rein and clear the way for high-density housing.

The inner city has become a battle zone and a losing battle for those wanting to live out their days in the old home.

Heritage controls were no more.

Traditional downtown neighborhoods are rapidly disappearing before the wrecker's machines.

Landowners were offered big sums to leave and if they didn't take it, well

they would really wish that they had.

Developers are using gangsters to harass residents and attack their property so as to weaken resistance.

Sometimes the developers didn't even wait for the sale.

Walls are bulldozed in during the night.

Apartments broken into and vandalized so they can't be rented again.

Some who refused to move found their homes surrounded by high-rise apartments, exactly like the guy from the Pixar movie Up.

The notice outside this house reads, I have absolutely no intention of ever selling.

Basically, Nakasoni created a free-for-all.

Does your city not have enough houses?

No problem.

Just pull down the family homes and put up high-rises.

Build houses over that park.

Cram a tiny house between those two big ones.

In the decades since Nagasone's term in office, a lot of things have changed.

The Japanese economy has crashed and recovered, crashed and recovered, but construction has never stopped.

Japanese cities are in a constant state of renewal.

The number of homes in Tokyo has increased by around 2% a year, way ahead of any other city of comparable scale.

There are now 800,000 empty houses and apartments in the world's biggest city, a city where construction is constant and green spaces are few.

Now, Nakasoni's policies are not the only reason why Japan has avoided a housing crisis.

One of those reasons is that the Japanese population is shrinking.

Like many developed countries, their birth rate has declined, but unlike Australia, North America and Europe, they don't have much immigration.

And that's partly due to flat-out racism, an attitude that Nakasone showed while talking about the Japanese people.

Yasuhiro Nakasone suggested publicly that the Japanese were more intelligent, because unlike America, they had no blacks, Mexicans, or Puerto Ricans to drag standards down.

Whoa, boy, okay.

In the uproar that followed, he pleaded misunderstanding, but most felt he spoke from the heart.

Yeah!

So, no immigrants, shrinking population.

But that hasn't affected the cities as much as the countryside.

Then, there's the tax.

Shinji Senda is 63 and preparing for death, or more accurately, death duties.

When Japanese people die, their estate is taxed.

With inheritance taxes at 50% or more.

So investing in property to hand down to your kids isn't nearly as attractive as it is elsewhere.

Also, while land has a lot of value, houses don't.

Japan's almost constant earthquakes have led the building standards to undergo constant revision to make sure that that homes can be insured.

Knocking down a home just because you want a new one is also common practice.

Living in a home you've bought from someone else is kind of just not a thing that people want to do.

All of that means that in Japan, homes are like cars.

They become less valuable with age.

Most homes in Japan are knocked down after about 30 years.

It's all drastically different to the approach that Australia has taken since the 1980s, where at the local level, development is something that many people fear.

If you want to demolish the building and put up a block of flats, it won't be allowed.

Across Australia's inner cities, whole suburbs are unable to be developed because of strict heritage rules.

Haberfield may be only the first of many suburbs to be heritage listed.

And at the national level, Australians have voted repeatedly for governments that promise to increase the value of their property assets.

Japan definitely isn't perfect, but it clearly shows that there are solutions out there to the housing crisis

if you really want to find them.

If you're listening, it's written by me, Matt Bevan.

This episode's executive producer was Yasmin Parry.

Audio production was by Anna John.

Next week we'll take a peek at what my colleague Mark Fennell is up to on his new podcast, No One Saw It Coming.

It's going to be a really fun chat.

Hopefully we will have more details about the live show then.

I'll see you soon.