The cost of living in Japan is famously high, particularly in urban areas. However, it is important to remember that Japanese salaries are also above average (around £1600-£3650 per month after tax) and that expats moving to Japan will enjoy a high standard of living. Although rents and utilities are costly by international standards, food and eating out can be relatively cheap in Japan. Living costs in general are significantly lower outside of the Tokyo area, particularly in the southern cities of Hiroshima and Nagasaki and northern cities, such as Hakodate.
Property prices in Japan are considered astronomical even to Japanese people, particularly in densely populated areas where space is at a premium. It is common for Japanese residents to take out mortgages with 100-year terms in order to get a foot on the property ladder. There are no restrictions on foreigners buying property in Japan but the technical (and costly) property system and legal procedures involved with buying a home can be off-putting.
The majority of Japanese people rent their accommodation, particularly in Tokyo, where most people live in studios or small family apartments. Rents can be high in the more luxurious areas of some cities, but are less as you get further from the city centre. Short-term rentals are available in Japan but contracts are usually for one year. Unless you are fluent in Japanese, the best way to find a rental property is through an English-speaking estate agent such as Housing Japan.
The initial costs involved in renting a property in Japan can be confusing, and appear unfair, to outsiders. On signing a lease agreement, a tenant must pay a rental deposit of 1-3 month’s rent as well as ‘key money’ (reikin), a non-refundable payment to show ‘gratitude’ to the landlord for permitting you to rent the property. Key money amounts vary but it is usually between one and three month’s rent. In general, tenants are also required to pay an annual service charge contribution to the upkeep of the building if the rental property is an apartment.
An annual municipal tax is paid by all homeowners in Japan, which is calculated on the value of the property.
Rates for utilities in Japan vary according to area and - as with most services in Japan - are high in comparison to Europe and the USA. When renting a property, your landlord will usually connect the utilities on your behalf. You will then be sent a monthly bill, which is paid by direct debit. There are a number of electricity companies in Japan, the largest being the Tokyo Electric Power Company (TEPCO) who also supply gas. Refuse collection is free but tenants must sort their waste before taking it to the local refuse collection area. High speed broadband Internet is widely available and companies such as ASAHI and J:Com offer competitive TV, phone and broadband packages.
The average cost of utilities (electricity, water, gas) for a studio apartment in Tokyo is around ¥19,663 (£164) per month with a cost of ¥3975 (£21.25) per month for a broadband connection.
All television owners in Japan must pay an annual licence fee or ‘receiving fee’ to fund the public broadcaster, Nippon Hoso Kyokai (NHK) of ¥13,600 (£72)
Healthcare and medical costs
Japan has a high standard of healthcare provision at relatively low cost to residents. Payment for medical treatment is through a government contribution of 70% with the remaining 30% paid for by the patient through a universal healthcare insurance system (kaihoken). Payments for health insurance can be made through an employer or one of the many specialist insurance companies in Japan. Fees for medical treatment are tightly regulated by the Japanese government and kept low. All foreigners are required to have a private health insurance policy to gain entry into Japan, although those who remain for longer periods are permitted to register with the National Insurance System, which also covers 70% of the cost of prescription medicine.
Japan is deservedly known throughout the world as a ‘shopper’s paradise.’ Fashionistas, techno-addicts and bargain hunters are all catered for in the cities which, despite their packed in urban areas, boast shopping malls spectacular both in scale and design.
Groceries and alcohol are generally cheaper in Japan than many Western countries and there are a number of large chain supermarkets such as Albis and Daiei which offer competitive prices. A number of online food shopping and delivery websites such as yoyo market are also widely used. On the whole Japanese people are very fashion-conscious and clothing can be expensive, particularly in cities.
Shops in Japan are open between 9am and 8pm, with limited hours on Sundays.
Most goods and services in Japan are subject to a sales tax, which is currently set at 8%.
- Rent on 1-bedroom apartment in city centre – ¥92,371.43 (£493.53)
- Rent on 1-bedroom apartment outside city centre – ¥ 58,012.04 (£310.13)
- Price of apartment in city centre – ¥1,345,049 (£7190.64)
- Price of apartment outside city centre – ¥640,904 (£3426.28)
- Loaf of bread – ¥167.45 (£0.90)
- Milk (1 litre) – ¥182.88 (£0.98)
- Bottled water (1.5 litre) – ¥107.93 (£0.76)
- Draught beer (0.5 litre) – ¥270.10 (£1.44)
- Packet of cigarettes – ¥450.00 (£2.41)
- Petrol (1 litre) – ¥144.43 (£0.77)
- Cinema ticket – ¥1,800.00 (£9.62)
Source: www.numbeo.com (accessed November 2015)
Budgeting and Savings
Japan has a number of price comparison websites, such as http://kakaku.com/, but bear in mind that they are all in Japanese. Savings can be made by shopping for food at large supermarkets and picking up bargains in the ubiquitous second hand and vintage clothing stores in Japan.