Japan: the number of new buildings drops

In Japan, the demographic decline and the economy growing at uninspiring rates are having their effect felt on the real estate market.

In November 2023 , housing starts in Japan fell 8.5% year-on-year, a sharper decline than the previous month's 6.3% decline and worse than market forecasts for a decline of 4.3%. This was the ninth decline in new construction starts since the beginning of the year and the fastest pace since August, due to the decline in home ownership (-17.3% compared to -17.2% in October) , those for rent (-5.3% compared to -1.0%), those built for sale (-5.2% compared to -1.2%) and those with two floors (-2.0% 1% compared to 0.8%).

At the same time, prefab construction starts grew 20.0%, down from the previous increase of 24.0%. Meanwhile, new construction for the construction sector recorded a strong rebound (72.3% versus -52.3%).

Let's see the related graph shortly:

Here is the construction trend in a broader horizon

In one of its reports, Fitch had shown the Japanese real estate market as not particularly brilliant, indeed it had noted a not huge, but still present, drop in the values ​​of properties in the Land of the Rising Sun, as we can see from the following graph:

Fitch saw a more restrictive BoJ monetary policy as the cause of this expected decline in property values. In reality, traditionally, the Japanese resort to debt very little, so monetary policy has not as strong an effect on the real estate market as in the USA. The problem is more banal, demographic: with few new families there is a static demand for construction, and this certainly does not push up the demand for houses and their prices.

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The article Japan: the number of new constructions collapses comes from Economic Scenarios .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/giappone-crolla-il-numero-di-nuove-costruzioni/ on Thu, 28 Dec 2023 07:30:52 +0000.