The past few months have seen a gradual recovery in Japanese housing starts excluding condominiums. Even as the market for single family homes started strengthening, condos languished due to built up inventories as well as continued hesitation on the part of lower income families.
However, April showed the first increase in overall housing starts in 17 months. The 0.6% increase was achieved due to a 27.4% jump in condo starts. Observers say this was a result of greater buying activity as people’s confidence in the economic recovery increased. Also, falling land prices also helped spur developers to take advantage of the current situation.
Unfortunately, the jump in condo starts was short lived. In May they fell by 31.5%. Single family homes maintained their strength advancing 4.8%. Overall this led to a 4.6% decline. While single family housing continues growing, condo inventories need to come into balance before the overall real estate market can return to sustained growth. In addition to low land prices, analysts also cite low interest rates and government incentive programs as key factors in helping this happen going forward.
Of course, the vast majority of Canadian wood products used in Japanese housing go into single family homes. For this reason, the strengthening trend we have seen this spring and summer is extremely positive news for our members and their clients in Japan. At recent industry events I was able to speak with many different importers and builders handling our products. It was refreshing to hear their optimism about this year. With the current recovery and strong Yen, one company president even told me that this was the best year for his company in a long time.
With the Japan Home Show coming up in November, members have a tremendous opportunity to take advantage of the recovery in the Japanese housing industry. BC Wood will be leading another large Canadian pavilion at the show that will be sure to make a big impact. We will be booking space this month, so if you are interested in more information on the show please contact Jim Ivanoff by e-mail or David Pao in our Langley office.