Japan must upgrade existing homes as housing starts decline says Nomura Research Institute
- Adam German
- Jun 19
- 3 min read
Nomura Research Institute, or NRI, said on June 18th that Japan’s shrinking new-build housing market means improving the energy performance of brand-new homes alone will not be enough to meet the country’s long-term decarbonization targets.
Photo by Joseph Chan on Unsplash
In its report, Forecast of New Housing Starts for Fiscal 2026 to Fiscal 2040: New-Build ZEH Is the Starting Point, With Further Efforts Needed to Raise Existing Housing Stock Performance, NRI forecasts that Japan’s new housing starts will reach 800,000 units in fiscal 2030 before falling to 610,000 units in fiscal 2040.
The report uses fiscal years for housing-start forecasts and calendar years for remodeling-market forecasts.
The decline in expected new construction is the backdrop to the report’s main point: Japan cannot meet its 2050 housing decarbonization target simply by making new homes more efficient.
Instead, NRI said Japan will need a broader strategy focused on existing homes as well.
That includes large-scale energy-efficiency renovations, planned demolition of aging homes and policies that help usable homes remain in the market for longer.
Existing Homes Move Into Focus
Japan’s occupied housing stock stood at an estimated 56.26 million units in fiscal 2025.
That figure is expected to decline to 51.68 million units in fiscal 2050.
New homes account for only about 1% of occupied housing stock each year.
NRI said this means even higher energy-efficiency standards for new homes will have only a limited effect unless older homes are also improved.
For every 1.6 high-performance new homes built, Japan would also need to renovate 3 existing homes and demolish 2 aging homes.
In full, NRI said Japan would need:
15.66 million high-performance new homes from fiscal 2026 onward.
30 million energy-efficiency renovations, mainly targeting homes that do not meet the latest energy-saving standards.
20.25 million demolitions of existing homes.
The renovation target would require an average of 1.2 million energy-efficiency renovations per year from fiscal 2026 to fiscal 2050.
The demolition target would require an average of 560,000 additional demolitions per year, on top of homes expected to be removed under existing trends.
Green Transformation Zero Energy Housing
Zero Energy Housing (ZEH) refers to homes designed to bring annual primary energy consumption close to net zero.
In practical terms, ZEH homes reduce energy use through insulation and efficient equipment, while offsetting remaining consumption with solar power and other energy-producing systems.
In fiscal 2024, about 30% of all new homes in Japan met ZEH conditions.
Among new homes built by major home-builders in FY2025, the share was much higher, at just under 80%.
NRI also highlighted the coming shift to GX ZEH, or Green Transformation zero energy housing.
GX ZEH is a stricter standard than conventional ZEH.
It requires stronger insulation and at least a 35% reduction in primary energy consumption from the baseline, compared with at least 20% for conventional ZEH.
The GX ZEH standard is scheduled to apply from April 2027.
By 2030 at the latest, Japan is also expected to raise mandatory energy-efficiency standards for new homes to a level equivalent to ZEH standards.
NRI’s point is that these changes are important, but not sufficient on their own.
With new homes representing only a small share of Japan’s overall housing stock each year, the performance of existing homes will become increasingly important.
Further Reading:
FY2024 NRI Report (Japanese only)
FY2025 NRI Report (Japanese only; upload both to your favorite AI-bot for further analysis)
Source:
R.E. Port News (Japanese only)
