Japan is trying to lure people into rural areas by selling $500 homes, but it's not enough to fix the country's 'ghost town' problem

In March of that year, the Tohoku Earthquake struck off the northeast coast of Japan and triggered a tsunami that killed more than 20,000 people. The death and destruction forced Uchiyama, who was born in the Greater Tokyo area, to consider his own legacy.

"I thought, what could I leave behind, and what example could I be to my children … if I can't say I lived a fulfilling and enjoyable existence?" Uchiyama told Insider.

Five years later, Uchiyama and his wife packed up their lives in the Tokyo area. Their destination lay nine hours south in the mountainous prefecture of Wakayama. There, he and his family settled into an akiya - an abandoned home - in the countryside.

"The akiya at the beginning of the move looked a little bit like a haunted house," Uchiyama, now in his mid-40s, admitted (he declined to share how much they bought it for). "But we changed the flooring, repaired the roof, and made the renovation a family project."

The family spent one year and one million yen (roughly $9,000) renovating the house; they now run an organic farm, cafe, and guest house out of the property.

While the US faces a shortage of homes, Japan is experiencing an altogether different issue: There's a glut of unoccupied homes throughout the country's rural areas. Japan's Housing and Land Survey, conducted every five years, logged a record high of 8.49 million akiya in 2018.

These abandoned houses have created "ghost villages" in Japan's rural prefectures where homes can neither be filled nor knocked down. In some areas, nearly one out of every five homes is empty. The government is offering incentives like $500 homes and tax breaks to entice residents to move from urban centers into rural areas like Wakayama, but cheap housing may not be enough to bridge the cultural divide and the bureaucratic difficulties that moving to a small town create.

While COVID-19 gave many workers the option of working in big cities like Tokyo without actually living there, Chris McMorran, an associate professor in the department of Japanese studies at the National University of Singapore (NUS), offers a bleak outlook for rural communities. He told Insider that young people are hesitant to move to countryside homes because of limited opportunities - and because of the akiya themselves.

"The fact that there are so many empty houses is a blight on the landscape, and a further deterrent, because people don't want to live in a terminal village surrounded by 'ghost houses,'" McMorran said.

It's also, he said, linked to the birthrate in Japan, which has been on a downward trend since the 1970s.

"This will only get worse," McMorran said, "because the core of the problem is there aren't enough people to go around in Japan."

One airport, four universities, and a whole lot of empty houses: This, at a glance, is Wakayama.

The prefecture of 934,000 people (as of the 2018 census) lies on the rugged southeastern coast of Japan. Wakayama City - the prefecture's biggest city and home to about 40% of its total population - is about an hour and 15 minutes from Osaka.

The area has been described both as Japan's spiritual heartland and its fruit kingdom. Among its biggest draws for tourists are the hot springs, the giant pandas at the Wakayama City Zoo, and the thousand-year-old Kumano Kodo Pilgrimage Route, which winds through 43 miles of mountains, forests, and coastlines.

For some, like Uchiyama, the land is the appeal.

"The idea of pursuing agriculture, and having a more grounded existence appealed to me," Uchiyama said. "I thought of Wakayama's abundant nature, seas, mountains, and rivers. I guess I thought it would be a gorgeous place for kids to grow up."

But to the vast majority of people Insider spoke to for this story, the prefecture is known first and foremost for something else: just how rural it is. Wakayama City is the only city in the prefecture with a population that exceeds 65,000.

"When driving, it is not uncommon for a troop of monkeys and badgers to cross the road even during the day," said Yamamoto Reiko, 39, who works in imports and moved to Wakayama from New York City. "Now I'm used to such a scene, but at first I was surprised."

The monkeys and badgers may feel comfortable crossing the road because of the relative lack of humans in the area. The prefecture's population has been steadily on the decline since 1996.

Richard Koo, chief economist at Japan's Nomura Research Institute (NRI), told Insider that 30 years ago, there was a lot of economic activity - mostly factories - in the Japanese countryside. But the Japanese yen kept rising until it hit a high in April 1995, which started hollowing out the countryside and creating a rust belt area that he likened to Ohio's.

The rural-urban migration trend stretches back decades before that, said Tsutsui Kazunobu, professor of regional studies at Japan's Tottori University. In 1960, there was an average of 39 households per rural community in Japan. By 2015, Tsutsui said, that number had fallen to just 15.

Nearly all of Wakayama's 30 towns, cities, and villages have seen their populations decrease between 1995 and 2020, according to the government's official census, which is conducted every five years. Of Japan's 47 prefectures, 37 recorded smaller populations in the 2018 census than they did in 1995. Notably, the prefectures that are home to Japan's three biggest cities (Tokyo, Yokohama, and Osaka) each saw a population increase in this same period.

Japan now lays claim to the highest vacancy rates of the 37 countries surveyed in a May report by the Organization for Economic Co-operation and Development (OECD). Nationally, it has a 14% vacancy rate.

In rural areas, that number spikes to 16%, and it's even higher in some prefectures. Four Japanese prefectures - Kochi, Kagoshima, and Tokushima among them - recorded vacancy rates above 18% in Japan's 2018 Housing and Land survey. Wakayama led the list with 18.8% vacancy.

Prime Minister Yoshihide Suga made rural revitalization a cornerstone of his platform when he took office in September. He has pledged to stimulate the rural economy and refocus the government's efforts beyond just the Tokyo metropolitan area.

"Through tourism and agricultural reforms, we will create a flow of people to rural areas, increase local incomes, revitalize rural areas, and boost the Japanese economy," said Suga in a speech to the Japanese parliament in October.

On the regional level, some governments are now making it as easy as possible for newcomers to buy homes in rural areas by dangling financial carrots. These range from renovation subsidies to cover the cost of remodeling an abandoned house to tax relief measures under which akiya buyers pay one-sixth of the city's annual property tax.

Others are launching akiya banks - websites that list abandoned homes for as little as 50,000 yen ($455).

Tokai Chizuru found her akiya in Wakayama in 2014. After living in Osaka with her husband Shinya for three years, Tokai wanted a simpler lifestyle and found a quaint property in rural Wakayama.

The couple moved into an old property in Irokawa village, some three hours from the nearest city. It took them eight months to clean up the house and 1.5 million yen ($12,500) to make the property inhabitable.

"We preserved most of the original structure," Tokai said, adding that most of the work centered around turning the abandoned paddy fields surrounding the house into fertile land to grow their own crops.

"In the springtime, we make tea and pick it ourselves. Sometimes, we make processed products from plums and yuzu we grow. We have started rearing some chickens, too," Tokai said. "I greatly enjoy the peace, quiet, and tradition of this area."

Furukawa Ryuji, the chief of the Wakayama prefectural planning department, which is in charge of promoting emigration and settlement, told Insider the prefecture launched its akiya bank in 2015. Their goal, he said, is "to solve various problems such as population decline, low birth rate, and an aging population, and to maintain the vitality and vibrancy of our community and the larger region."

Since inception, it's seen around 600 listings, 200 of which have been matched with new owners, Furukawa said, noting that properties in good condition tend to go first. The akiya bank currently has about 110 properties listed, ranging from a dilapidated $800 home that has a caved-in roof and a missing front door to a $45,000, eight-bedroom property that's being sold with the surrounding farmland.

Space to build

Furukawa said private real estate agencies also handle some listings. Other newcomers to the akiya scene have inherited their homes.

Nomura Yuichi and his wife Seiko, who are both in their mid-30s, moved from Okinawa to Seiko's hometown of Wakayama in 2011. Five years later, they moved into an abandoned home previously owned by Seiko's family. The couple invested three million yen ($37,000) into renovating the shop and the apartment above it - refitting the electrical systems, redoing the flooring, and redesigning the facade.

"We tried to keep quite a lot of the original structure. We bought red roof tiles for the facade, and used part of the original concrete to form the shape of turtle designs on the floor," Nomura said.

Now, Nomura and his family live and work out of the Jimamaya bakery, selling custard buns and danishes made from local ingredients out the door.

"I've always had a dream of owning my own bakery, and making bread by hand instead of mass-producing it," Nomura said. "I have achieved that dream now."

Nomura is not alone among the Wakayama transplants Insider spoke to who say the move afforded them the opportunity to launch small businesses on the cheap.

Sakurai Yasunori, who is in his early 50s, spotted a business opportunity in an abandoned building near his office in Wakayama. In 2012, he invested one million yen ($12,100) into renovating the akiya, which he lives in and rents out as a guest house for travelers trekking the Kumano Kodo walking trail that winds through the prefecture.

Meanwhile, Hayashi Noriaki, a 30-something businessman, turned a Wakayama akiya into a movie-theater-cum-bookstore, investing six million yen ($72,800) and four years into the process.

"There's still a resistance to repopulate the countryside because there are areas that are rural-rural - like Wakayama," said McMorran, the NUS professor. "The lack of accessibility to basic amenities like hospitals and convenience stores puts people off."

Yamamoto, the imports expert who moved to Wakayama from NYC, told Insider the infrastructure for remote work is lacking. Her husband, an iOS developer, couldn't find work in the prefecture and had to move to Tokyo to get a job.

For many of those who do want to move to the countryside, buying a pre-owned home is unappealing.

"The Japanese definitely like to have their own house - preferably a newly built house," said Koo, the NRI economist.

"In the United States, if you buy a house, chances are it's pre-owned," said Koo. "But here, the market for pre-owned houses is a fraction of the market for newly built houses."

In the US, HGTV reigns supreme and it's a certain badge of honor to buy an old home and bootstrap its way into becoming your dream home. But there isn't a strong DIY renovation culture in Japan, which might otherwise entice would-be homeowners to buy a rundown property, said Douglas Southerland, the senior economist responsible for OECD monitoring of the Japanese economy.

It's not just about personal and cultural preferences - it's also about safety. The first Building Standard Law in Japan was introduced in 1950. Since then, it has been amended at least five times to make older buildings sturdier so they can withstand damage from earthquakes. Many akiya were built before a 1981 amendment to the law was introduced, which means they are considered structurally fragile.

"Land without anything on it has a higher value than land with a preowned house on it," Koo said, adding that once a home is more than 10 or 15 years old, its value is "worse than nothing" because of the cost of tearing the home down.

So, seemingly, the solution would be to demolish and build new homes on the land - but it's hard for the government to knock down homes (even abandoned ones) because of Japan's sticky property rights laws.

Before 2015, said McMorran, the Japanese government did not have the right to contact an owner and order them to patch up a dilapidated or abandoned home. In rural areas, he went on, there's a multi-generational attachment to a home or a piece of land that makes it difficult for the state to step in.

Koo described the Japanese akiya essentially as being homes in limbo: The person who owns it doesn't want it or can't be contacted, but the government can't take ownership of it, and so it sits there, abandoned.

"It's an enormous effort to trace down who the house belongs to, so most of the time, the government just gives up," Koo said. "So the akiya sits there for years with the government unable even to take it down."

And on top of all the economic, financial, and cultural barriers to entry, there's an extra societal barrier to account for too, Koo said.

"The countryside of Japan is a very, very closed society," Koo said. "If you're a foreigner or just not from that area and you try to enter that society, it takes a long time - years, even decades - before they'll accept you as one of them," Koo said.

"There's a job problem because the jobs in those regions are gone," said Koo, "and there's an exclusionary attitude."

Wakayama is only a microcosm of the bigger population shifts happening across Japan and around the world.

Some towns in Italy have famously been selling homes for as little as $1 - or even giving them away for free - in a desperate repopulation bid. Similarly, towns across the US, many of them in rural middle America, are offering cash rewards as large as $10,000 to people who move there.

The akiya banks are also not the only solution being presented to Japan's vacancy problem. Legal reform around property rights is one change at play, said Koo: "The government is trying to make it easier now to take over houses that no one came back for, and take over the land and redevelop the real estate."

And COVID-19 may be bringing about changes to the way people view the interplay between work and life. Furukawa, the head of Wakayama's akiya bank, noted that interest in Wakayama has increased during the pandemic.

"Teleworking is possible now, and side businesses are becoming more 'trendy.' Living and working in an akiya can address these trends," he said.

But the reality that the majority of the economists and academics Insider spoke to points back to a future in which these homes will remain empty. Koo said the pandemic has had a crippling effect on the tourism sector of Suga's rural revitalization plan, which he described as "one of the few truly bright spots in the Japanese economy for the past five to 10 years."

McMorran, the NUS professor, went so far as to describe the repopulation situation - and, by extension, the filling of akiya - as a zero-sum game in which prefectures compete with each other for the limited population that remains in rural areas.

"There may be a handful of 'winning prefectures' in the race to revitalize," McMorran said. "But there will also be so many more losers."