Japan 2021 Housing Starts Year in Review
Japan’s 2021 total housing starts increased 5.1% to 856,484 units. Several trends are discernable. Despite multiple pandemic-related lockdowns, housing steadily recovered and posted gains from March onwards. Wooden housing as a percentage of overall housing continues to gain market share, reaching a multi-decade high of 58.6%. At just over the half-million level, wooden starts remain near the same level as in the early 2000’s. Hardly the pessimistic secular decline scenario that housing market analysts have often advanced.
Although owner-occupied housing has led the recovery, rental housing has now also posted 10 months of consecutive gains. Relative strength in single-family housing is contributing to an increase in floor area. Post and beam starts experienced an 8.3% gain in number of starts and a 9.9% increase in floor area. Platform frame starts rose 3.2% with a corresponding floor area increase of 5.8%. There is also some indication that the gain in floor area may be partly attributable to increased construction in non-metropolitan areas such as in the prefectures bordering Tokyo, the Tohoku region and Okinawa where average home sizes are larger.
By housing method, post and beam starts are gaining incremental market share versus prefab, platform frame and non-wood starts. Market share for post and beam starts increased 1.3% to 46.2%. For 2×4 starts, market share fell 0.2% to 11.2%. Gradual market share erosion of 2×4 housing to post and beam construction is an area of concern to watch going forward. Through recent discussions with builders and pre-cut companies, I’m advised that the outlook for 2022 is similar to last year with modestly steady growth expected. Total annual housing starts are forecast to fall within the 850,000 to 900,000 range.
Non-Residential Construction Year End Review
In contrast to housing, non-residential wooden construction remained somewhat sluggish in 2021. Overall non-residential units edged up 0.6% to 46,707 units. Total non-residential floor area increased 7.7% to 38,385,703m2. Non-residential wooden units edged 2.2% lower to 17,110 units and floor area declined 3.6% to 3,270,893m2. Market share for wood fell 1% to 37% by number of buildings or to 8.5% by floor area. Non-residential builders and architects have commented that the Japanese government’s immediate pandemic-related focus of providing vaccines, optimizing the use of existing facilities and enhancing medical-related services has resulted in construction delays for new elderly care, social welfare and medical facilities. As the leading building use in wooden non-residential construction, the slowdown in elderly care and social welfare new construction weighed on wood demand. Estimated wood consumption in non-residential construction was 572,000m3. By building type elderly and medical care, mixed residential & commercial, agricultural and mixed commercial buildings led the rankings for wood use.