On September 30th, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) announced that Year-on-Year (YoY) housing starts in August 2024 fell for the fourth straight month.
The total number of new housing starts reached 66,819 units, down 5.1%YoY, while the total floor area of new housing construction declined to 5.039 million square meters, an 8.9% drop compared to the same period last year.
This decline is speculated to reflect ongoing challenges driven by rising construction costs and downward demographic trends.
Japan Housing Starts Property Type Breakdown
Custom-Built Single-Family Homes (SFH): 19,597 units(down 6.6%YoY), marking the 33rd straight month of YoY decline.
Rental housing: 28,939 units (down 1.4% YoY), reversing the YoY growth seen in July.
Strata Title SFH & Condos: 17,240 units (down 12.0% YoY), recording its fourth straight month of decline. The total broken down between SFH and Condo starts are as follows:
Condominiums: 7,501 units (down 5.0% YoY).
SFH: 9,578 units (down 17.4% YoY), continuing a 22-month-long downward trend.
Japan Regional Variations in Housing Starts
Among Japan’s three major metropolitan areas, results were mixed:
Greater Tokyo Area: 23,769 units (down 6.4% YoY in August 2024)
Greater Nagoya: 8,035 units (down 10.5% YoY). This includes a steep 27.2% drop in rental unit starts.
Greater Osaka: 10,770 units (up 4.5% YoY).
Why are Housing Starts Important?
The term 'housing start' signifies the initiation of construction on a new residential property.
Housing starts serve as an indicator of builders' confidence in investing resources into new projects. This confidence is influenced by their assessments of housing demand, making the trend in housing starts a valuable insight into risk appetite and consumer sentiment.
As a significant investment in capital goods, the commencement of new housing projects not only stimulates consumer spending on household appliances and furnishings but also serves as a key economic indicator closely monitored by financial markets.
The vitality of the housing sector also significantly influences employment and commodity prices, including those of lumber and copper.
Further Reading:
MLIT August 2024 Updated Housing Starts (Japanese only; below excel from MLIT site linked here)
Source:
R.E. Port News (Japanese only)
