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  • Writer's pictureAdam German

Japan new housing starts decline for eight consecutive months

On February 29th, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) released the nationwide housing start statistics for January of 2024.


All percentages below refer to Year-on-Year (YoY) changes; in other words January this year compared to January last year.


The number of new housing starts was 58,849 units, a decrease of 7.5% compared to the same month of the previous year, marking the eighth consecutive month of YoY decline. 


The total floor area of new housing starts was 4.491 million square meters, down 11.5%, continuing to decline for the 12th consecutive month. 


The seasonally adjusted annual rate was 802,000 units, a decrease of 1.5% from the previous month.


By property type, custom single family home starts amounted to 14,805 units, down 11.0% from the same month of the previous year, marking a 26-month streak of YoY declines.


Rental housing increased for the first time in six months to 24,681 units, up 2.7%. 


Strata title properties decreased again to 19,039 units, down 16.1%. 


Within this category, strata condo starts decreased again to 9,020 units, down 24.8%, and strata title single family home starts decreased to 9,867 units, down 6.7%, marking a 15-month continuous decline.


By major metropolitan area, the total number of units in the Greater Tokyo Area was 23,319, down 5.6%. This includes 3,512 custom home starts (down 4.0%), 10,601 rental unit starts (up 8.8%), and 9,139 condominiums (down 18.4%). 


In the Chubu region, the total was 7,328 units, up 2.1%, with 2,461 custom home starts (down 5.8%), 2,492 rental unit starts (up 7.1%), and 2,362 strata title starts (up 6.2%). 


In the Kinki region, the total was 9,109 units, down 19.0%, with 2,016 custom home starts (down 6.0%), 4,168 rental unit starts (down 12.9%), and 2,903 strata title starts (down 32.2%).


Why are Housing Starts so Important?

Housing starts are a barometer of the overall health of an economy; if starts rise then it means developers and their bankers are confident enough to build houses or condos and assume there will be buyers to purchase at the other end of the process.


Alternatively if housing starts show a decline, it is usually interpreted as the opposite.  In this case, the banks will be hesitant to lend to developers, throttling their ability to start construction projects and would rather wait until circumstances are better.  


This particular metric is important because construction can take a year or more meaning decisions made now on whether to commit to building and whether the minimum sell price estimates for the finished units look achievable is reflective of the short to mid term economic sentiment. 


Further Reading:

MLIT January 2024 Nationwide Housing Start Data (Japanese only)

January 2024 Japan Housing Starts Data
.pdf
Download PDF • 661KB

Source:

R.E. Port News (Japanese only)


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