Economic Refugees

A common lament amongst Aussie & Kiwi expats these days is the realization that they cannot afford to ever return home.  Who would have imagined 25 years ago that the expats who moved to Japan and were earning much more than they could in Australia or New Zealand would now find themselves financially stuck in Japan? 

Hardest hit are the Aussies who bought property in Japan. While Australian property prices have increased enormously over the last 25 years, Japanese property prices have dropped around 75%.  

In 1990, Brian bought a new house in a new development in Osaka for $500,000. Twenty four years later, he’ll be lucky to sell it for $100,000. Why such a huge drop in property prices? Part of the problem is consumer confidence. Salaries are still relatively good in Japan, but after such huge drops in prices, no one sees property as an investment. Naturally, many people defaulted on their loans too.

Another reason for Japan’s stagnant property market is the decreasing population and a government that does not want to consider immigration. Currently, there are over 8 million abandoned houses in Japan and this is only going to increase.

Adding to the problem is that Japan’s taxation system still reflects the needs of a post-war economy that supports construction and favors people buying new homes. To make matters worse for the Aussie economic refugees in Japan, the Japanese government is madly printing money to drop the value of the yen.

So, even if Brian can sell his house in Japan for $100,000, he looks to lose another 25% or so of that money when converting to Aussie dollars. Meanwhile, Brian looks at what $75,000 can buy in Australia and it’s not much. He is also not likely to qualify for a loan in Australia as he is still paying off the $400,000 he borrowed for his house in Japan.

Peggy is in a similar situation. “We live in a beautiful home in Japan, built during the Japanese economic bubble when money was spent with wild abandon. It would cost around 2 million dollars just to build this house today but the banks in Japan only look at how old a house is. Our house is 30 years old so it’s considered to be worth nothing. We like the idea of returning to Australia but even if we could find a buyer, we could only afford a shabby flat in a nothing suburb. Japan is very safe, clean and amazing value for money so staying here until we die is okay, but I feel sad that we’ve basically lost the option of ever returning to live in Oz.“

Brian, Peggy and other Aussie Economic Refugees in Japan joke about starting up a charity for Australian refugees in Japan. .