Real estate construction in Japan hard hit by recession, latest figures show
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New property construction in Japan fell to the lowest level in 2009 since the nation celebrated its postwar recovery by hosting the Olympics in 1964, as builders were hit by dwindling household incomes and sustained deflation.
The latest figures from the Land Ministry show that construction companies broke ground on 788,410 homes last year, 27.9% fewer than in 2008, although the pace of decrease eased in the past four months of 2009 with housing starts falling just 15.7% in December from a year earlier.
The report highlights a decline that’s likely to see Japan lose its place as the world’s second-largest economy to China this year. It also indicates that government programmes to stimulate the real estate market have been unable to reverse expectations that property prices will fall, keeping households away from investing in real estate.
‘It’s been a very miserable year. There certainly is an improvement underway, but it’s been slow to materialize, and it’s starting from very low levels,’ said Richard Jerram, chief economist at Macquarie Securities.
Japan has been blighted by price declines and sluggish economic growth since an asset bubble burst two decades ago. An index of residential land prices has slid more than 40% from its 1991 peak, according to figures from the Japan Real Estate Institute.
The report highlights a decline that’s likely to see Japan lose its place as the world’s second-largest economy to China this year. It also indicates that government programmes to stimulate the real estate market have been unable to reverse expectations that property prices will fall, keeping households away from investing in real estate.
‘It’s been a very miserable year. There certainly is an improvement underway, but it’s been slow to materialize, and it’s starting from very low levels,’ said Richard Jerram, chief economist at Macquarie Securities.
Japan has been blighted by price declines and sluggish economic growth since an asset bubble burst two decades ago. An index of residential land prices has slid more than 40% from its 1991 peak, according to figures from the Japan Real Estate Institute.
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