Effective Policies for Lengthening the Value of Buildings of Used Detached Houses ? A Game Theoretical Analysis

Abstract

Used detached houses in Japan become valueless in 20-25 years since construction. This makes it difficult for the owners to have an incentive to maintain their own buildings. Although both public and private sectors have tried to lengthen the value of buildings, no decisive measures have been found yet. We consider a game of two buyers of used detached houses of the same quality. We regard evaluation of the economic life of the building at the time of purchase as a strategy and the capital gain at the time of sale as a payoff, and model the relation between the time period until buildings are sold and the gain. We study effective policies for lengthening the value of buildings.