@
mjm
Unless things have changed, the rating doesn't have any impact on life safety. Anything built today is safe. Sure with cheaper building you might get cracks and other issues, but you won't get a collapse or structural failure. If you look at Kobe where they had intensity 7 shockwaves, there was virtually no damage to any post 1971 structures. A few cracks. That was it. I've spent a ton of time with structural engineers on new buildings and reinforcement projects, and as far as I can tell the proclaimed differences in earthquake engineering/building technique is mostly sales hype and has nothing to do with earthquake life safety (tsunamis/fires are a different question).
As to the economics.
- Self employed, retired, investor, etc. - Almost impossible to get a property loan regardless of financial condition.
- Agree rental income in central Tokyo (on non-premium residential property anyway) is rock solid even in a downturn. Residential rents in Tokyo went down maybe only 2 to 3 percent after Lehman. (Rents on premium residential properties got whacked.) Occupancy rates have been similarly solid for non-premium properties during downturns, but I was actually referring to the case, where you want to sell the property when the market is down. Even on non-premium properties, it would be very easy to lose 30% or 40% of what you paid if your timing is bad. Some people who bought high end condos in the late 1980s lost 90% of the value of their property.
- I was not referring to a premium on the loan pricing (AFAIK there's very little difference in loan terms between banks,) I was referring to the premium you pay on the purchase price if you buy a newly built condo or house.
If you believe in EMH (efficient market hypothesis), the expected after-tax risk adjusted cost of owning can't be cheaper than renting. I certainly would not predict future prices based on past trends....good way to get wiped out. That said, if someone needed a modest place to live in Tokyo for 15 to 20 years and has a salaried job at a reputable employer, buying might be the right option... but I'd probably wait until 2020 since IMHO the market's a little rich at the moment. Or if you want a nice place and don't mind the risk/return characteristics, buying might also be a good option. But I don't think you can generalize that buying is the right option for everybody... even in central Tokyo.