Reports of a new consumption tax may spur a rush to buy homes in Japan, some experts predict.
The increase in consumption tax could add thousands of yen to the price of a home, the Japan Times reports.
"Because the consumption tax -- which applies to new homes but not to land -- is levied when the buyer takes possession of the property, experts are expecting a rush on new homes by the end of the summer," the newspaper said in an article this week.
The new tax would add 600,000 yen to the price of a 45 million new home, the paper estimates.
New incentives for home purchases may offset the tax increase, but it is certainly not good news for Japan's housing market. Home prices in Japan dropped steadily after 2010, but reportedly steadied in the latter part of 2012.
The Japan Times article offers insights into the market:
"In Japan, land keeps more of its value than structures do, and the closer a property is to the center of Tokyo or a major regional center, the more value it will retain over time. The same goes for proximity to a train station, especially for investment purposes, since transportation availability is the most important consideration for renters.
However, older properties lose their value at a slower rate than brand new ones simply because they start out cheaper. The main problem with older properties is that while they are inexpensive, there is a certain amount of risk involved in renovation. An older house may require structural renovation -- and not just the cosmetic kind. Condos are a safer bet because they tend to be more structurally sound, but if the building is more than 25 years old, there's the possibility that the current group of owners will want to rebuild in the near future, which means the buyer may suddenly be faced with a huge bill for her share of common property above and beyond the money she paid for her condo."