Saturday, 20 August 2011

Built to last or built to lose

It is sometimes hard for me to come to terms with the disposable nature of house building in Japan. Apparently the average life time of a house in Japan is 17 years. In the UK, it would take 1700 years to replace the entire building stock. Although those two numbers are not equivalent, it gives some idea of the difference. I come from a country where houses are built to last. I grew up in a house that was a couple of hundred years old, which was not particularly unusual. The house we rent here now is about a hundred years old, and it's a constant surprise that it is still here.

It is easy to write this off as bad workmanship or see it in terms of a nation that loves new things and is obsessed with the disposal of the old. It has been suggested that Japan needs a large construction industry as there are periodic needs for mass rebuilding after natural disasters. It seems that the construction industry is a powerful lobby and they can veto any suggestions to improve building standards. There is also no doubt something left over from the post-war rebuilding of Japan where fast, cheap building was the only option. I think there is no simple reason.

There is a vicious circle, as I found when I was asking the bank about loans. As far as they are concerned, and as far as the taxman is concerned too, a house is worth nothing after twenty-five years. The biggest drop in value is the moment you move in. In most cases, the house is worth less than you paid for it as soon as you turn the key and walk over the threshold.

The people at the bank weren't particularly interested in the building specs when they were valuingthe property, instead they look at the houses in the neighbourhood andtake an average per floor area. In fact as far as collateral, they don't really take the house into consideration and just look at the value of the land. So unless you're building with cash, and have lots of it, you're at the mercy of a bank that is not going to encourage you to increase the spec. There is little incentive to build something that will last more than 25 years, although a standard for a hundred-year house has recently been introduced, that can open the door to lower mortgage rates.

Houses in the UK, and probably the rest of Europe, the US and Australia, steadily increase in value. From when they are built, they start to get more valuable. After a while, when they hit an unfashionable or unserviceable age they stop getting more valuable, but even then they will hold their value. A little later they start to go up again. There are certainly stories of people with negative equity and people who lose out, but that's usually short term and a combination of local conditions and some measure of extra bad luck for the house owners, forcing them to sell at the wrong time.

As we were looking around Matsumoto for houses and land, we often saw old houses for sale that were very reasonable. If they weren't sold after a year or two, they were knocked down, and the price of the land, without a house, would go up. There is a common wisdom here that renovating old houses is more expensive than building new ones, and I think it may be true if you're comparing a low-cost new-build with restoring a ruin to its ancient form. I think it's more likely to be propaganda by the building trade, a symptom of few people or businesses that renovate, and the prevailing trend of not looking after houses, but letting them wear out until they are knocked down, which is all part of the vicious cycle.

Having said that, if I look at the house we are in now and if we were to bring it up to a comfortable level to live in, we'd have to replace the roof, replace the windows that make up the north and south walls, and pull up the floors and do some work on what's underneath. By the time we'd taken all the bits off that need changing, we'd be left with a wooden frame, and that probably would have to be made earthquake proof as their are no diagonal supports and the whole thing is a mechanism (see here). Also, I'd want to raise all the horizontal beams so the doorways are at least twenty or thirty centimetres above my head rather than two or three centimetres below, just where there is a permanent bruise on my forehead.

One way of looking at this difference is in terms of agriculture. The UK traditionally has pastoral farming, so buildings have been essential to provide shelter for people and animals, so that animals can feed off the surrounding land. Buildings have intrinsic value in this sense. Japanese agriculture is arable, so that land itself is valuable for intensive planting of crops. Any building is going to reduce this value by stopping the production of crops.

Another consequence is in the notion of "home". For the British, a home is a solid thing. An Englishman's home is his castle. For Japanese people, any building seems arbitrary and the sense of belonging is to a community of people.

So while I see what I am doing as an investment, and put myself on a mission to make a small change to the way houses are built and treated here, I'm probably just pouring cash into a hole in the ground, and the main interest of most of the people involved is to catch some of that cash as it falls. I'm sure the house could be built to a similar specification for less cost, and hopefully everyone involved will learn something onthe way, so if another idiot comes along asking for a house that doesn't consume, it'll be easier for everyone concerned.