Real Estate Splits Japanese Into the Haves, Have-Nots
It’s a time of grumbling for many in the broad Japanese middle class who have been excluded from the boom of the late 1980s.
Squeezed by high prices and unlucky in not owning land, these people are voicing a dissatisfaction that, the government worries, may fuel a sense of injustice and upset the social unity of postwar Japan.
About 90% of all Japanese are considered part of the middle class. Janitors, factory workers and office clerks alike dress the part as they travel to and from work.
Middle-class conformity was reinforced for decades by small gaps in income and by social values that discouraged flaunting wealth.
But skyrocketing land prices due to financial speculation and strong demand for office and residential space have made those who own real estate enormously wealthy, while others have abandoned hopes of home-ownership.
$500,000 Condominium
Residential land prices in Tokyo, home to one-tenth of Japan’s 122 million people, rose 68.8% in 1987 after climbing 40.5% in 1986. The average price of an 874-square-foot condominium now is nearly $500,000, or seven times the annual income of an average family of four, according to an Economic Planning Agency report.
In most European or American cities, the cost is only four times annual earnings, and the living space at least twice as large. Californians last summer complained that the median cost of a home had risen to $160,000, less than one-third the cost of the average apartment in Tokyo.
First-time home purchases are almost impossible in large cities like Tokyo. The national home ownership rate is 62%; in Tokyo it is 44%.
About 70% of Japanese in surveys say they want to own their homes, even if it’s inconveniently far from work, but more than half of the 20- to 40-year-old men say they’ve given up.
The proportion of Tokyo households expecting to eventually buy a home fell from 33% in 1977 to 15% in 1987.
Rents average $500 a month for about 500 square feet. Those who bought suburban homes before the recent surge in land prices pay about $600 a month on mortgages--some run for as long as 75 years--and spend three to five hours commuting each day.
‘Hounded by Housing’
Some snapshots of the harried middle class:
- Emiko Shiroishi, 30, her small daughter and husband pay $600 a month for a 450-square-foot, three-room apartment in northern Tokyo, hoping to eventually buy an apartment outside the city.
- Company worker Hiroto Furukawa, 38, lives with his wife and three children in a slightly larger apartment about an hour outside Tokyo. He bought before the recent surge in prices and is paying a 35-year mortgage.
- Toshihide Tabe, a company employee, complains in a letter to the Asahi Shumbun newspaper that in his family, “we are still hounded by housing, car and education loans. . . . Salary earners are all in the same boat.”
Tokyo homeowners held real estate averaging nearly $700,000 in value in 1987, said a government study, concluding that the gap between haves and have-nots is inciting a growing sense of injustice.
Of Japan’s 100 top income-earners last year, 77 were involved in real estate deals, tax officials say. Timber firm President Hajime Kitami, 53, topped the list with $53.6 million in income, much of it from land sales.
Rising educational costs and the need to save for retirement squeeze most Japanese harder. Families paid an average $106 a month on educational costs in 1987--a figure that escalates as children approach college age.
Losing Sense of Equality
“Once average people like us pay our rent and taxes, there’s hardly enough left to eat. Lots of people really have to watch their pennies and scrimp to get by,” says 60-year-old Fumiteru Shimizu.
“Only in Japan can people work hard for 30 years and not be able to afford to buy even a small house,” Shimizu says.
The Mainichi Shimbun newspaper commented: “One factor which has made Japan relatively stable socially and economically has been the sense of equality among the people. Income, assets and the standard of living are no longer perceived as level. . . . Is this not signaling that our social stability is beginning to shake? Those who are responsible for tax, agricultural and administrative reforms should take the signal seriously.”
The trends alarm the government which, despite its strengths, has failed to manage well one of Japan’s scarcest resources, land. “The gap in net worth between those who own land and those who do not is widening, creating a feeling of social inadequacy,” said a recent government land report.
Labor unions and business circles are pressing for improvements in living standards.
While Japan’s per capita national income is about $16,000, the world’s highest, “the Japanese people can scarcely be said to enjoy a quality of life that compares with the living standards of other industrial nations,” said Toshikuni Yahiro, vice chairman of the Japan Federation of Economic Organizations, in a policy proposal to the government last fall.
Yahiro partly blamed regulations that protect such special interest groups as farmers and retailers.
