Japan housing starts mark 12-month growth streak

The Ministry of Land, Infrastructure, Transport and Tourism’s figures for housing starts in July and August 2013 show starts have now risen for the 12 straight months. This is the longest growth streak since 1996, just before the consumption tax was raised in April 1997.

Housing starts nationwide rose 12 percent in July from a year earlier to 84,459 units for the 11th straight monthly increase, and by 8.8 percent from a year earlier in August with 84,343 new homes for the 12th straight monthly gain.

In July, housing starts for owner occupied dwellings rose by 11.1 per cent from a year earlier, while starts on rental houses increased 19.4 per cent, up for the 5th consecutive month.

In August, housing starts for owner occupied dwellings rose by 11.2 per cent from a year earlier, while orders logged with 50 major construction companies grew by 24.1 per cent year over year, and starts on rental accommodation grew 7.0 percent.

The growth is driven by a number of factors including:
• Rising consumer confidence on the back of Abenomics, showing a long-term gradual recovery from the 2009 financial crisis.
• Expectations that low interest rates on mortgages won’t last.
• The increase in the sales tax from 5 per cent to 8 per cent confirmed for April 2014, and slated to increase from 8 per cent to 10 per cent in October 2015, which is a major driver in the buying of big ticket items.
• A major rise in international investors especially from Asia, attracted by good valuations and returns, the expectation of rising property values, and the affordability of the yen.