The sales price of a detached property in Japan can vary depending on many factors.
For example, area, building area, and distance from the station are some of them.
One of the most important factors affecting the selling price is the age of the building.
In this article, we will explain how the selling price of detached properties changes with the age of the building.

Selling price until the building is 10 years old

Firstly, we will look at the sales price of houses between 5 and 10 years old and how they change.

After 5 years

First is the sale price at 5 years old.
When a property is five years old, its price drops by about 30% from the time it was newly builst.
Although five years old means that the property is still relatively new, it is still a used property.
Once someone moves in, the property becomes used, and the value drops significantly from that moment.
This is thought to be largely due to the fact that Japanese people tend to prefer newly built properties.

Price at 10 years old

It is said that after 10 years, the sales price of a house generally declines to 50% of the price of a new building.
Since the price of a property declines even if it is only one year old, those who are considering selling at this stage are advised to do so as soon as possible.

Detached houses decline in property value faster than condominiums

In general, detached houses are said to decline in property value faster than condominiums.
This is because houses are often built of wood and are prone to aging.
For example, wood often decomposes due to humidity and changes caused by rain and wind, and is often damaged by termites and other pests.
Condominiums, on the other hand, are often constructed of reinforced concrete.
Reinforced concrete deteriorates as a result of progressive rusting, but at a slower rate than that of wooden construction.
Thus, the difference in structure between wooden and reinforced concrete and other types of construction affects the fluctuation of property values.

The period up to 10 years old is the period of the most severe decline in property values

We have told you about real estate prices at the point where the property is 5 or 10 years old, and the decline in property values during this period is the most severe.
There are two reasons.
First, as mentioned earlier, Japanese people tend to prefer newly built properties.
The second reason is that the way real estate prices are determined differs between new and used properties.
When determining the price of new real estate, the developer's profit involved in site acquisition and construction is added to the price, rather than just the market price.
As a result, the price is often 10-20% higher than the normal market price.
On the other hand, the transaction price of used real estate is generally close to the market price.
In other words, the amount of money that was higher than the market price because it was newly built will reflect the market price as soon as it is changed to a used property, resulting in an even steeper decline in asset value.

Selling price when the building is more than 20 years old

When the age of the property is 10 to 20 years old

After 10 years of construction, the decline in property values becomes milder thereafter.
After 15 years, the property value drops to about 30% of the value of a new building, and after 20 years, the value drops to about 20%.
Once 20 years have passed, there is little value left in the building.

Building value will be Zero after 22 years

It is said that the value of a wooden detached property is reduced to zero after 22 years of construction.
This is because the statutory useful life of a building is set at 22 years.
The legal useful life refers to the period over which the asset can continue to have value.
For example, the value of real estate can be divided into the value of the building and the value of the land.
Buildings age over time, but land does not.
The statutory useful life is established to clearly and equally show such changes in property value.
However, the statutory useful life is only a number used for accounting purposes, and it does not mean that the asset is no longer useful after the statutory useful life.
For reference, the following is an explanation of depreciation, which is an important accounting treatment.
Depreciation is the allocation of the cost of acquiring an asset over its legal useful life and recording it as an expense.
In the case of a wooden detached property, the legal useful life is 22 years.
Therefore, the cost of the building can be expensed in fixed amounts over the 22-year period.
Please keep this in mind as it is important for tax reporting.

What happens when the age of the building is over 22 years?

Again, just because a property is 22 years old does not mean that you can no longer live in it.
It only means that the property's value for tax purposes will be zero.
However, if the property is this old, the building will have aged considerably.
In such a situation, what kind of tips are necessary to sell the property for as high a price as possible?

Tips for selling a 20+ year old house for a higher price

Even if a property is more than 20 years old, it is possible to sell it for as high a price as possible if you follow some tips.
Here are three tips for selling at a high price.

Renovations

Remodeling is effective for properties that are quite old.
Remodeling can improve the appearance of the property and make it look less old.
However, there are some caveats to remodeling.
The first is that it is not always possible to sell the property at a price that includes the renovation costs.
If more remodeling is done than necessary and the cost is not recovered through the sale, it may be an unnecessary expense.
Second, buyers may look forward to remodeling the property to their own tastes.
A design that you have done yourself may not be to everyone's taste, and it is not certain that it will lead to an increase in the value of the property.
When remodeling, we recommend that you keep remodeling to the minimum necessary, such as repairing areas that may interfere with normal living conditions.

Understand the surrounding market conditions

It is very important to understand the surrounding market price of the real estate you are considering selling.
You can easily research market prices by conducting a search on the Internet.
Buyers will shortlist several properties, compare and consider the conditions of each, and decide on the property.
If the selling price is set too far off from the market price, the time to sell may be significantly extended.
Unless there is enough value added to the property to raise its price, otherwise, set a price that is appropriate for the market.

Conduct a home inspection

Inspection refers to a condition survey of a building conducted by a licensed architect or home inspector.
This provides objective proof of the quality and degree of deterioration.
The inspection report also makes it easier for buyers to purchase a property with peace of mind, since they can understand the condition of the building structure, which is not available to the general public.
The cost of an inspection is typically 50,000-100,000 yen.
It is not a cheap price, but in order to avoid problems being found in the building later on, it is definitely a benefit when selling a used property.

In conclusion

In this article, we explained how the age of the building affects the sale price of a detached property.
Properties that are more than 20 years old have a building value of almost zero, but can be sold.
However, since it is expected to have deteriorated to some extent, it is necessary to remodel or otherwise devise ways to market the property.
After conducting research on how much the market value is, what kind of design is preferred, etc., it is best to be strategic and pro-active regarding sales activities.