quote:Originally posted by Halebop

Pennywise the market was out of control because of those demographics.
I disagree (somewhat[:I]) with this point. It may go some way to explain the buildup, but my point is the "stats" in Japan have been distorted.

The market was out of control due to a booming economy and absolute frenzy of wealth including in the face of massive export growth, a super strong currency and a military style dedicated workforce. The new generation of Japanese has quite a different attitude and they certainly don't work as hard as their parents did, this also being part of the problem.

The rising market stopped nearly overnight (around 90-91) and demographics certainly didn't change that fast. It has been a slow decline so it doesn't explain it fully.

I worked in this industry over there and I was involved with it first hand.
The biggest reason Japan hasn't pulled out of the housing slump is actually due to a nations "attitude" and skill in the mortgage market. They just kept lending money that became more and more bad debt for years.

*The US pulled out of their housing crisis by introducing the first CMOs (collaterised mortgage obligations) and quickly moved to recycle bad debt very quickly (have you read "Liars Poker"). Japanese government officals have been in recent years studing and working with the HUD in the US to understand the workings of Freddie Mac and Fannie Mae.
One of the biggest goals of the current government is to unlock the massive savings in the Post Office savings system by privatising it, freeing up some of that money to be available for the mortgage market. It would be the worlds largest bank.

Until recent times Japanese banks kept loaning money to defaulters like sticking plasters and this has stiffled the banking system for years.
The core rot in the Japanese banking system is/was NPL (non performing loans) and over the last 5 years, alot of US investors have started buying up and collaterising these bad debts.

This has helped lead to some recovery and stabilization in some city areas of Japan, but not rurally.

I blame the banking system before AND after the bubble for the property market mess they found themselves in over the last 15 years.

Many Japanese are still very gun shy on property after seeing their families get burnt severely after the bubble burst.