turning japanese i think i'm turning japanese i really think so

pricedout_1

:rotfl:

I have been trying to get HPE ratio for Japan in 1991 !!!!
However in my defence am going to a nightclub converted from an underground public toilet on shepherds bush green later :cool:

Thanks to everyone for posting.

Are we saying then there are no parallels that can be drawn between the main economic indicators of differing economies, that immediately precede a house price crash ? That there are no patterns that these indicators follow that point towards a crash ?

Ian_W

Hey Hugh - you wouldn't be a reporter would you?
Only ask on the basis that you shouldn't let the facts get in the way of a good story!

Now there are some minor dissimilarities with Japan in in 1991:
1. Japan never really had a mass house buying market in urban areas like we have. Land, rather than what was on it, was hugely expensive having increased by 70x [7,000%?! :eek: ] it's value in the previous 35yrs. Tokyo was valued at more than the entire US of A and the downtown royal palace of a few acres was worth more than Florida.
Now in the UK has seen price rises of around a 1600% [and London 2000%] over 30yrs but I somehow doubt that HMQ's little pile in SW1 would quite be valued as highly as any single US State. Small matter really I suppose.
2. The culture of government, industry and financial institutions was built on the belief that stock markets, land prices and everything economic would always rise - hence Banks lent to individuals based on the FUTURE value of property and land - rather than the current inflated value. Individuals raised these loans on the same property from several banks at once without it being questioned and the money was largely used to speculate on the stock market.
Puts interest only 125% loans a tad to shame me thinks.
3. When the stock market collapsed these loans, of course, couldn't be repaid some banks went into denial for a couple of years making these delinquent debts even worse and causing some banks to collapse.

Since then there has been a relative collapse in land prices and even FTBers have been in shorter supply than rocking horse droppings.

Other than that it's a really good comparison with the present over inflated UK housing market and a really good reason why you shouldn't buy any time soon. :rotfl:

P.S. I've heard about folks going for a night out in public toilets on Shepherds Bush green but I thought it was still illegal - shows what I know!

lynzpower

Has anyone here ever been to Japan?

I was there on a conference a few years ago, and learned many things about the cultural aspect of employment and money.

One thing that staggered me was in the recession, the salarymen get up get dressed, go to work, but as theyve been laid off, and cultuirally completely unacceptable to tell the truth in this respect to your family, go and sit on park benches all day. In fact you couldnt find a seat in Toykos palace gardens in cold december when I was there,full of suits staring into lifes abyss. ( I was there WELL after the recession mind you, think its a popular place to hang out & get low)

This got me to thinking, how on earth do thy pay the rents? They are super inflated. ONe person I met told me that they dont get housing benefit as we would . Is this true? Jesus, a pint of milk set me back well over a pound there, a macdonalds in toyko was nearly a tenner. How do the japanese live, if the breadwiiner is pretending to be a breadwinner and they are not? Debt? or have I missed something?

Another very interesting cultural difference, which I found highly irritating as a straightforward brit, was that the japanese do find it tremendously difficult, and disrespectful to deliver bad news. I made freinds with an Aussie girl who had lived in tokyo and rural japan for many years, so she explained a lot of the things I had expereinced. Eg she explained she went to a bento-house and ordered chicken to take out x3 got them all home they were all fish, she took them back, they apologised profusely and said we'll give you another, packed it up she got them home they were all fish. she took them back again and they were going, no its chicken, when the fishes were whole in the noodles with the fins in :rotfl: additionally, i had LOADS of thing slike this happen. I know im rambling now, but what impact on the economy.

At least here - I know its not great, but people do get refused for debt every day. I wonder if its different in Japan?

I hope someone can explain as I find modern japanese cultural ways fascinating.

BobProperty

Ian_W wrote:

...... Individuals raised these loans on the same property from several banks at once without it being questioned......

Robert Maxwell managed that over here against shares instead of property......

Ian_W

BobProperty wrote:

Robert Maxwell managed that over here against shares instead of property......

Don't lets go there Bob!
He also borrowed against the Maxwell Group pension fund and my mother now receives about 10% of what she would have been entitled to by her contributions _pale_ - the company which she worked for [totally unrelated to the media] having been taken over by the MG about 5yrs earlier. :mad:

Actually, it probably is a very good example but where Maxwell was a fairly isolated example this was accepted at all levels inc government, banks, business and individuals. One similarity is the belief that values only ever rise - in our case with house, in their case with everything economic otherwise they're about as similar as lynz fish was to chicken!

P.S. Didn't get chance to wish you all the best with your career change lynz so I'll do it now. Obviously a glutton for punishment, social worker to EA - but very BoL. :kisses3:

Mason

lynzpower wrote:

Has anyone here ever been to Japan?

First visited Japan during the world cup and now have property in Tokyo. We think land prices were at their lowest ebb about 3 years ago and rental yields easily cover the cost of our mortgage.

We have a friend who lives in Chiba (commuting distance to Tokyo - it's near the airport and Tokyo Disney) who bought her apartment in 1990 at 300k and it has dropped to about 200K now!

But as there are enormous differences between politics, economies, cultures, personal investment and work ethics with the UK that I cannot begin to imagine that any UK property bubble burst will have quite an impact - political suicide being one.

Because of these differences it does mean advantages can be taken by both sides. For example, renting is considered normal, paying a high price for rent is expected as space is at a premium (70% of Japan is uninhabitable), people expect to work hard for a living, generally people don't leave home until they can afford rent from a good salary.

Although the story of our friend from Chiba isn't untypical it would be wrong to say that it was homeowners who were the main victims of the recession. Businesses that borrowed heavily and the banks that they borrowed from lost out hugely with a consequential impact on those that worked for them.

Doubt this has helped a great deal but maybe of interest.

pricedout_1

Mason - good post highlighting differences - thanks :T

Ian_W wrote:

Now there are some minor dissimilarities with Japan in in 1991:
1. Japan never really had a mass house buying market in urban areas like we have. Land, rather than what was on it, was hugely expensive having increased by 70x [7,000%?! :eek: ] it's value in the previous 35yrs
Now in the UK has seen price rises of around a 1600% [and London 2000%] over 30yrs .

Yes this is quite a large disimilarity. But the starting point is quite a long time ago, so if the starting point in Japan was much lower than the UK then would that explain the greater rate of HPI ?

So, in Japan, when you buy property, is it divided up into land + property, as opposed to the UK where this distinction isn't made ?

Ian_W wrote:

2. The culture of government, industry and financial institutions was built on the belief that stock markets, land prices and everything economic would always rise - hence Banks lent to individuals based on the FUTURE value of property and land - rather than the current inflated value. Individuals raised these loans on the same property from several banks at once without it being questioned and the money was largely used to speculate on the stock market.
Puts interest only 125% loans a tad to shame me thinks.
.

So in other words there was a lot of irresponsible lending and borrowing. Pretty much what we have now ?

From the posts so far there are obviously differences in culture, politics, and the economy between the UK and Japan. However ... I am still interested in trying to identify similarities and patterns in the main economic indicators at the troughs and peaks of the recent housing cycles of the major economies.

Has this been done before ? I'm sure it has somewhere! If not then I'll get me anorak on and trawl through the internet for hours on end .....

Alan M - I've seen form the other threads on here that you are well up on the stats .... Can you point me in the right direction for finding out this information ?

Alan_M_2

hughgallagher wrote:

Alan M - I've seen form the other threads on here that you are well up on the stats .... Can you point me in the right direction for finding out this information ?

Actually I had a good look, but other than anecdotal I didn't find anything worth posting as a statement of fact.

I think because their properties differ so much from ours, and it appears what you're saying about land is correct, that there are no (or very few) statistics produced in this respect.

As an aside....for someone who reads so many statisitcs (i.e. Me) I actually have an aversion to them, mainly because many are presented as fact without any corroborative evidence of how they were compiled or obtained.

The ones that irk me most are the Halifax and Nationwide HPI released monthly, neither of these are based on house prices, they are purely based on mortgages completed in the preceding month, and make no differentiation between new sales and remortgages. So as a gauge as to whether house prices are increasing they are irrelevant at worst, misleading at best.

Now if they were described as the Halifax/Nationwide mortgage index, it would be more descriptive, but then probably wouldn't carry much weight on the front page of the Daily Mail.

Statistics from the Land registry are really the best available, and they tend to be a quarter in arrears. minor rant over.....

Xbigman

The Japanese house price to earnings ratio is not of much use on its own. There are many other factors that affect affordability. Council tax ramping up over recent years must be the equivelent (I'm guessing) of 10k on the price of a house in affordability terms.

The one conclusion we can draw from Japan is that like the UK, house prices were overvalued and other diverse factors combined to drive negative sentiment about housing into a price crash.

Someone mentioned the Japanese banks. Yes they did contribute to the problems. They massively overlent (more than our banks have now) and they had a business model that ran with the legal minimum cash reserves, sometimes less (4% in cash I think). Add in a couple of earthquakes, Nick Leeson and corruption in politics and there you have it.
Regards



X

devils_advocate

First visited Japan during the world cup and now have property in Tokyo. We think land prices were at their lowest ebb about 3 years ago and rental yields easily cover the cost of our mortgage.

Mason

I'm very interested as to how you've managed to overcome the practical difficulties of buying in Japan - presumably you don't have a gaijin card - or is one of you Japanese? How did you open a bank account?