Buying a Home: What can you buy for $250,000 in Tokyo?

With home mortgage rates in Japan at a historic low, there has been a surge of interest among first-time home buyers in Japan.

Whether you are a long-term resident of Japan who has decided that it’s finally time to buy or an overseas resident who is looking to buy a second home or vacation home, one good thing to know is that the secondary (resale) market in Tokyo continues to offer many options across the various price points.

In this article, we take a look at what you can buy for about $250,000 or about ¥27 million yen, which would be considered a relatively low price point for the Tokyo metro area.

First, let’s get the basic questions out of the way:

Can a foreigner buy property in Japan?

Yes, a foreigner can buy property in Japan, regardless of your nationality or country of residence.

Can a foreigner get a mortgage in Japan?

Yes, a foreigner can get a mortgage in Japan.

It used to be almost impossible for a foreigner to get a mortgage in Japan, but in recent years, some Japanese banks will lend to foreign nationals with permanent residency (PR) status.

Three banks that have mortgage products tailored to non-Japanese are: Citibank Japan, Shinsei Bank, and Suruga Bank. Of these, only Citibank does NOT require that applicants have permanent residency or be married to a Japanese national, but you must be a citizen or resident of Japan.

For more details, please see: “Basic Requirements for Getting a Mortgage as a Foreigner in Japan“.

What interest rate can I get?

The answer will vary depending on the particular property, how much you put down, and your credit worthiness, as determined by the bank.

For reference, the official “Flat 35” rate for home mortgage loans originating this month (May 2016) is 1.080%, an all-time historic low and the fifth consecutive month in which the rate has fallen. This rate is for loans where the term is 21 years or above and less than 35 years, and where the loan amount is 90% or less than the price of the property.

Flat 35 loans are fixed interest loans with terms of 35 years, offered by a wide variety of Japanese banks, and securitized by the Japan Housing Financing Agency (JHFA). The JHFA is a Japanese public corporation similar to Fannie Mae in the US or the Canada Mortgage and Housing Corporation.

Can a non-resident foreigner get a mortgage from a Japanese bank?

It is difficult for a non-resident foreigner to borrow from a bank in Japan for a property purchase, but it may be possible depending on your particular circumstance.

One of our partners, Premium Value Bank, has consultants who have helped clients with this question, particularly for investment properties. You can contact them using the inquiry form here: Premium Value Bank.

What about taxes and fees?

Taxes will add about 6% to 7% to the purchase price. Please see this article for a detailed explanation of Japanese real estate taxes, including annual fixed-asset (property) taxes to plan for.

Brokerage Fees

If you use an agent to buy a property, you will have to a brokerage fee (commission) of 3% of the purchase price plus 60,000 yen plus consumption tax (currently 8%).

What about monthly expenses?

If you buy an apartment in Japan, you should also set aside building management fees, in addition to the repair reserve fees mentioned above.

Building management fees pay for the day-to-day running of the building, such as common area maintenance and the salary of the on-site building manager, if there is one. The building’s management association, consisting of the owners of the building, set the building management fees.

As is clear from the summary above, the listing price is just the listing price, and you will have to consider the various taxes and fees involved in making such a large purchase, but that being said, let’s take a look at some listings.

Brand New 3-Bedroom Detached House in Hachioji

Where: Hachijoji, a city in western Tokyo, about a 30-minute direct ride from Shinjuku Station

Price: ¥28,800,000 ($260,000) — A little over our budget!

Size and Layout: 99.36-sqm (1,070-sqft), 2-story, 3-bedroom house with a bonus storage room and wood deck

Floors: 2-stories

Land rights: Freehold

Year Built: 2016

Structure: Wood

3-Bedroom Detached House in Shinagawa

Where: Shinagawa Ward, Omori Station on the Keihin Tohoku line. Excellent location for commuting in eastern Tokyo, with easy access to Tokyo Station north, and Yokohama south.

The house is located in an “urbanisation promotion” area, which means that the government has designated the neighborhood for special development funds and assistance. Omori is a busy area with many shops and restaurants near the station.

Editor’s note: land prices in the stations adjacent to Shinagawa have risen in recent years, since the Shinagawa station area was named as a “Special Zone for Asian Headquarters”. Please see this article for more info: Shinagawa to be Japan’s Gateway to the World?

Price: ¥21,800,000 (about $198,000)

Size and Layout: 42.43-sqm (457-sqft), 3-bedroom house

Floors: 2-stories

Land rights: Freehold

Year Built: 1984

Structure: Wood

Studio Apartment, 1-minute from Roppongi Station

Where: 1-minute walk from Roppongi Station. The apartment is located between Tokyo Midtown and Roppongi Hills.

Price: ¥24,980,000 ($228,000)

Size and Layout: 24.42-sqm (263-sqft) studio apartment

Floor #: 4th-floor unit in 9-story building

Land rights: Freehold

Year Built: 1980

Structure: Steel-reinforced concrete (SRC)

You may also be interested in: What can you buy in Tokyo for $350,000?