According to the survey of housing
and land statistics conducted every five years, Japan had 50.2
million housing units (including owned homes, rented accommodation,
and housing under construction), or 1.13 units per household
in 1998, up from 1.05 units per household in 1973, suggesting
a quantitative improvement in meeting the nation's housing needs.(*1)
Owned homes accounted for 60.3 % of the total number of occupied
homes. Reflecting the prolonged economic slump, however, housing
starts in recent years have been slow, despite such measures
as lowering of interest rates on loans, an extension of credit
line by the government-backed Housing Loan Corporation, and
a tax-relief program for housing loans. In fiscal year 2002,
the figure decreased 2.4% over the previous year to 1.15 million
units, marking the third straight year of decline.(*2)
Housing prices have followed land prices downward, while interest
rates remain perennially low. In spite of this, efforts to induce
consumer demand have had little effect. Annual housing investment
in fiscal 2003 was estimated at ¥17.5 trillion, down 2.5%
from the previous year, according to the Ministry of Land, Infrastructure
and Transport.(*3)
Housing Conditions and Expenses
Housing conditions have generally improved in recent years,
as demonstrated by the fact that the average size of condominiums
sold in the Tokyo metropolitan area in 2002 came close to 80
square meters.(*4) According to a report compiled by the Tokyo
Metropolitan Government, the average price of flats in new condominiums
in Tokyo in 2002 fell 1.2% from a year earlier to ¥44.6
million. As a result, the ratio of the average condominium price
to the average annual income of workers also fell slightly to
5.9-fold in 2002.(*5)
Consumer expectations of higher living standards have found
expression in more demand for qualitative improvements in housing
in terms of size and function. The government is taking steps
to rebuild dilapidated public housing, construct special housing
for the elderly, and ensure that rents remain reasonable.
Land Prices
The high population density in urban areas, along with the fact
that 66% of Japan is forested and/or mountainous with little
potential for housing, has pushed up the price of land suitable
for housing. Land prices in Japan skyrocketed from the latter
half of the 1980's, reaching a peak in around 1991 and then
tumbled down in line with the burst of the asset-inflated economic
bubble. According to statistics at the beginning of 2003, the
price of residential land had fallen 5.6% in Tokyo, 8.8% in
Osaka, and 5.6% in Nagoya, compared with the previous year.(*6)
Compared with the peak in 1991, average land prices for residential
areas nationwide were down 39.7%, while those for commercial
areas were 65% lower. This marked the twelfth consecutive year
of decline, albeit the rate has slowed. The price of certain
areas of prime land in central Tokyo, however, had started to
rise again.
Housing Loan Corporation to Be Abolished
The government has devised plans to eliminate in fiscal year
2006 the Housing Loan Corporation (*7), a government-affiliated
financial institution established to aid home purchases, as
part of a wider effort to reform public-sector corporations.
The Housing Loan Corporation, which at one time made 40% of
all new mortgage loans, has been the target of sharp criticism
from private-sector financial institutions, which complain about
the unfair advantage that it wields as a government-backed institution.
Its share of new mortgage lending, however, has been falling
in recent years, allaying some of this criticism. Private-sector
financial institutions, meanwhile, have been rolling out long-term,
fixed-rate mortgage loans ahead of the Corporation's planned
shutdown. Moreover, the market is seeing a growing number of
loan products with terms close to those offered by the Corporation,
against a backdrop of ultra low interest rates and the development
of financial derivatives.
Leading up to its shutdown, the Housing Loan Corporation's lending
operations will be gradually scaled down and finally taken over
by a new independent administrative corporation. The new corporation
will focus on purchasing long-term, fixed-rate mortgage loans
from private-sector financial institutions and repackaging these
assets into securities. The full phase-out of lending operations
will be decided depending on the ability of the private sector
to meet demand for mortgage loans.
Rental Housing Attracts Younger Generations
As the country's prolonged economic woes are disproving the
myth that wages inevitably rise with seniority, growing numbers
of younger Japanese seem to be resigning themselves to a lifetime
of renting their dwellings, instead of buying them. In 2002,
the total number of rental residential contracts rose 4% from
a year earlier to a record high in the Tokyo metropolitan area,
according to At Home (*8), a real estate research firm. Housing
construction companies as well as prefabricated housing makers
are refining their strategies to match the changes in the market,
putting more effort into marketing rental dwellings.
The stage for the current rented-housing boom was set in 1998,
when Japanese household income began dropping amid chronic deflation.
Because Japanese mortgage rates tend to be fixed, household
debt levels have climbed as incomes slip. At the same time,
people's desire to rent has increased as a long slide in land
prices puts downward pressure on rents for stand-alone houses
as well as condominiums.
Conversion of Old Office Buildings into
Condos
As the problem of excess office space in central Tokyo becomes
more and more visible due to a number of redevelopment projects
such as Roppongi Hills and Shiodome Sio-Site, construction firms
are considering converting redundant office space into residential
space. In line with the growing vacancy rate for office space
in central Tokyo, the demand for residential units in the downtown
Tokyo is rising as consumers drawn to the convenience of big
cities are showing a growing interest in living in urban centers.
Converting office space into a residential complex not only
transforms it into a valuable asset, it is also said to be cheaper
than reconstructing. The cost of conversion is roughly calculated
as half that of tearing down a building and constructing a new
one.
According to a white paper issued by the land ministry in June
2003, the government supports the idea of converting office
space into residential space.(*9) Construction companies have
been urging owners of office buildings that they constructed
to have them converted to residential space. The construction
firm Taisei Corporation, for example, established a new department
for conversion projects in February 2003.(*10)
|
