Japanese housing starts expected to fall

The volume of housing starts in Japan is expected to fall to a 48-year low in the current year ending March 2010, according to the head of Japan’s largest housebuilder, as the country’s weak economy has deterred many would-be buyers from purchasing property in Japan.

Takeo Higuchi of Daiwa House Industry Co says that the annual starts this financial year could fall to as low as 800,000, down 20% year-on-year. He also projects that new housing supply will continue to fall over the coming years, and could reach as low as 600,000 units annually.

Japan’s home starts were just 1.04 million last year, down from a peak of 1.9 million residential properties in 1972, according to data compiled by Ministry of Land, Infrastructure, Transport and Tourism.

Higuchi commented: “The property market will remain sluggish for another year or two because Japan’s economy is in bad shape. High unemployment and falling wages are scaring away many potential buyers.”

Residential property sales are also expected to fall by 7.2% to around £11 billion in the year ending March 2010.

Japan’s economic and housing recovery is being hindered by its unemployment level which currently stands at a post war high of around 5.7%, while average wages in the country has fallen for 17 consecutive months.