In Japan which is known as an earthquake-prone country, the purchase of real estate is inextricably linked to disaster risk. Many people are hesitant to purchase real estate due to concerns about natural disaster risk. However, when asked specifically what kind of major losses they are exposed to, many are unable to answer the question.
In this article, we will consider how a major earthquake disaster could affect real estate.
1) Catastrophe and condominium prices
How did the Kumamoto earthquake in 2016 affect real estate prices? Let’s take a look at how they have recovered again.
Data of 2016
Data of 2017
（From West Japan Real Estate Information Network Summary)
Regarding the contract ㎡ unit price, it is clear that prices have not fallen in Kumamoto Prefecture since the earthquake. Naturally, the number of transactions has decreased, but condominium prices did not fall even after the major earthquake.
2) Collapsed building type and number of collapsed buildings
(Excerpt from the report of the committee to analyze the causes of building damage in the Kumamoto earthquake)
＊S construction: Steel construction
RC construction: Reinforced Concrete construction
As can be seen, the new earthquake-proof standard (1981 or later) for RC construction causes the least damage.
3) If your condominium is damaged
First, most importantly, a condominium with a functioning management association should be selected. It is important to be sure to check that the repair reserve fund is well funded.
Second, it is important to carefully consider insurance coverage.
Note that earthquake damage may also affect the private area for small condominiums.
Please contact us individually about the unit ownership law and the damaged condominium act, as they are lengthy.
Condominiums are decided by a majority vote of the members of the management association but those who disagree with the majority decision have the right to demand that the management association purchase their rights.
【 Summary 】
1) Select a property to purchase by checking the reserve for repairs with a functioning management association.
2) Confirm that the property is based on the new earthquake-proof standard and that large-scale repairs have been carried out.
3) There is no need to lower prices or rush to sell just because of an earthquake as the magnitude of damage caused by an earthquake does not necessarily translate into the magnitude of damage to condominiums.