In Japan, too, it's hard to buy a home

After 10 years of scraping together every spare yen, Kuniyoshi Saito, a Japanese office worker, has given up all hope of ever becoming a homeowner. Although his salary has been rising rapidly over the years, it has failed to keep pace with soaring land and house costs. Land prices, in fact, have increased an average of 20 percent every year since 1960, three times as fast as the rise in consumer prices. In the past 12 months, home prices have gone up 30 percent, putting ownership far beyond the reach of millions of marginal buyers.

Yet in the past decade, Japan has invested more of its gross national product in housing than has any other major industrialized nation. One-third of the country's present 34 million dwellings were built since 1970.

But the dwindeling availability of land and its prohibitive cost, plus the high rate of mortgages and other interest charges, hav plunged the housing industry into deep depression.

An industry survey recently found that the average price of condominium apartments in Tokyo was $130,000. To put that into context, most of the apartments, euphemistically referred to as "mansions," are in reality three-room units with about 60 square meters (about 72 square yards) of floor space.

In the first half of this year, only 70 percent of the condominiums on the market were sold, down from 83 percent a year earlier, when a "mansion boom" was still in full swing. The majority of big-city home buyers would prefer, but cannot afford, a separate house, which usually costs twice as much as an apartment with the same floor space.

So the Japanese home buyer is paying more than his Western counterpart -- and getting less in return.

Although the government has been annually enforcing increases in hous size (new homes now are supposed to cover at least 110 square meters -- about 132 square yards) the average Japanese home still occupies only 56 square meters (67 square yards).

By comparison, rentals average out at 24 square meters (29 square yards), and there are still 1.1 million appalling "rabbit hutches," with only 11 square meters (13 square yards) of space and no bathroom.

The situation is much better in Japan's more remote southern and northern regions, and this helps to make the national figures more respectable. In overcrowded Tokyo, however, where land costs reach a national high, the average home covers only 37 square meters (44 square yards).

Geography and social trends don't help. Three-quarters of Japan is covered with mountains, so that the 120 million people are squashed into a relatively small area -- averaging out at 900 residents per square kilometer (compared with the US figure of 250 and the Dutch average of 400).

Migration from rural areas to the industrial heartland around the capital has increased the population of the Greater Tokyo area to almost 23 million, with a density of 15,000 people per square kilometer in the center.

With industries claiming much of the prime flat land, builders have begun placing houses in all sorts of odd locations, including artificial terraces on mountainsides.

A tax structure that heavily penalizes land sales also restricts availability , although the government is belatedly moving to lift some of the burden. The same applies to a local government levy on nonagricultural land.

Apart from rising costs of land and building materials, another damper on the housing market is high mortgage and other interest rates.Commercial banks offer mortgage loans at 8.88 percent interest -- low by foreign standards, but a record high for Japan.

The government-financed housing loan corporation offers an exceptionally low rate of 5.5 percent, but that doesn't mean much to the inflation-battered public.

Basically, to qualify for a mortgage a home buyer must put up 20 percent of the purchase price in cash. At the same time, his principal and interest payments must not exceed 30 percent of gross income.

This means that the buyer of a condominium costing 22 million yen, for example, would have to put up 4.4 million yen in cash, and have an annual income of 5.5 million yen. Yet the average Japanese worker in his mid-30s, like Mr. Saito, earns only about 3 million yen annually.

The usual practice is to combine mortgage borrowing from the public housing loan corporation and commercial banks.

Some marginal buyers who, barely meeting requirements, rushed to buy homes in recent years now find themselves having to de falt on payments because of a reduced income caused by a business slowdown.

It's estimated that the poorest borrowers are using one-third of their gross monthly income to pay off loans -- and there is no tax relief on the interest payments.

The government has tried to help by encouraging more public housing -- a third through the Japan housing corporation and the rest by local governments.

But the public sector has been forced to go far out into the countryside in recent years in search of cheap land and low-cost housing. The result has been "bed towns," gray ghettos of look-alike concrete blocks, highly unpopular with residents who face a lack of amenities and hours of commuting to city jobs each day.

These commuters form the bulk of the estimated 35 percent of Japanese who are said to be unhappy with their housing and want to move.

Various remedies are being floated, but they tend to founder on the high cost of land -- a problem that has defied solution for most of the postwar era.

Many housing experts feel that the only answer is to privide government-subsidized, los-cost rental accomodations of a more attractive nature. These would offer an alternative to the growing legion of Japanese who feel they are losing out in the national home-ownership lottery.