Relationship between Rate of Vacant Houses and Rate of Houses below Exemption Point of Fixed Asset Tax in Japan

Abstract

In recent years, the issue of shrinking cities has been under discussion in many countries. One of the problems caused by urban shrinking is the emergence of vacant houses and vacant land, and this aspect is receiving increasing academic and political attention in Japan. The factor of vacant houses has been underscored in many previous studies, but there has been little analysis of the vacancy rate and its factors from the point of view of maintenance cost. Vacant houses that have reached the end of their life span are abandoned for long periods because of high reconstruction and demolition costs or because of low maintenance costs, including special exemption from the fixed asset tax. Therefore, the vacancy rate may be high in areas with many houses whose assessed value for the fixed asset tax is less than the tax-exemption point. Analysis reveals a positive correlation between the rate of vacant houses and the rate of houses below the tax-exemption point of the fixed asset tax. In addition, a spatial lag model explaining the vacant house rate and the rate of houses below the tax-exemption point is a significant result.