Thursday, February 28, 2013
Japanese Consumers Increasingly Mulling Home Purchases
TOKYO (Nikkei)--More and more Japanese consumers are looking to buy homes, in line with improving business sentiment, the recent decline of the yen and expectations that interest rates and land prices will rise.
- The current economic outlook is prompting more Japanese consumers to consider buying homes.
Sumitomo Forestry Co. (1911) held housing exhibitions in February in the cities of Osaka and Nagoya. This year, more people than ever before made down payments of 50,000 yen for homebuilding-related services such as land surveys and the drafting of basic floor plans.
Misawa Homes Co. (1722), meanwhile, has also seen a flood of prospective home buyers in its model homes in recent months.
According to the Federation of Home Constructors, around 300,000 potential home buyers visited housing exhibits in January, up 3% on the year. An official from the organization said that turnout has been good, given how bad the weather was in January.
These developments are due to the impact of "Abenomics," as the economic policies of Prime Minister Shinzo Abe have been dubbed by the Japanese media. His plans include aggressive monetary easing measures, substantial fiscal spending and a growth strategy.
Rising stock prices are also supporting growth in Japan's sluggish economy. An official at one leading condominium developer said that the firm has felt the impact of Abe's policies, because more consumers are now considering buying homes than ever before.
Mitsubishi Jisho Residence Co. plans to ramp up its efforts to sell premium condominiums in fiscal 2013. The number of people who visited its scale mock-ups of premium condos, which are priced between 80 million yen and 130 million yen, roughly doubled on the month in January.
Mitsubishi Jisho Residence Executive Vice President Osamu Segawa said that financial industry professionals, in particular, have been snapping up properties.
Fears that interest rates will rise, due to the 2% inflation target set by the government and the Bank of Japan, are also prompting more people to consider buying property. Condo developer consultant Total Brain Co.'s president, Tatsuhiko Hisamitsu, said that consumers may start buying in droves if such concerns intensify.
Land prices are also rising. The Ministry of Land published a report on land values in January that showed that prices of 20 out of 44 locations in residential areas across the nation have risen since October. Meanwhile, prices for three locations declined over this period.
Industry watchers have been expecting a last-minute jump in demand before the consumption tax is raised in April 2014. But the government has said that it will expand and extend its tax breaks for home buyers, which could weaken this anticipated surge.
Home construction firms and condominium developers hope that new housing starts will surpass 900,000 in 2013. They reached roughly 880,000 in 2012, up 6% on the year.
(The Nikkei, Feb. 28 morning edition)