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Opportunity and Challenge Changing Housing Market in Japan

Opportunity and Challenge Changing Housing Market in Japan January / February, 3003 Kuraishi Fumiaki Advisor in charge of the Asia Builders’ Week Japan Management Association (JMA) Former General Manager of JETRO Housing Materials Center (Osaka) Outline ( Outlines )

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Opportunity and Challenge Changing Housing Market in Japan

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  1. Opportunity and ChallengeChanging Housing Market in Japan January / February, 3003 Kuraishi Fumiaki Advisor in charge of the Asia Builders’ Week Japan Management Association (JMA) Former General Manager of JETRO Housing Materials Center (Osaka)

  2. Outline ( Outlines ) 1. Still the Second Largest Housing Market 2. Characteristics of Japanese Housing Market 3. Regulatory Changes in Recent Years 4. Steady Growth of Imported House 5. Imported Building Materials 6. Changing Attitude of Consumers and Home Builders 7. Potentials: Renovation, Home Centers, Resort Homes

  3. The Second Largest Housing Market Source: National Countries (OECD) Account of OECD

  4. Housing Situation in Japan anｄ US Source:US Census Bureau（2000）, Survey of Housing Loan (fiscal year 2000) by Government Housing Loan Corporation

  5. New Housing Market

  6. Reasons of Decline of New Home Market 1. No Growth of Population ( Numbers of Family) 2. Enough Numbers of Homes (50.3million homes for 43.9 million families): But Quality, not Enough 3. Depressed Economy Source: Census of Housing and Land( latest 1998) by Ministry of Construction

  7. Difficult Time for Home Builders Giant Home Builders (Prefab Home) Ex. Sekisui House(60,996 units /year ) Daiwa House Industry (34,695 / year) Misawa Home ( about 30,000/year) Medium to Large Home Builders(1,000~5,000/year) Medium size Home Builders (100~1,000/year) Small & Medium Home Builders (less than 100/year) Most of 130,000 Small builders ( built 5~10/year)

  8. Competitive Market Force Big Companies to go Merger and Acquisition, Joint Ventures and Collaborations Ex. TOSTEM and INAX set up a common holding company TOTO and MATSUSHI DENKO started business collaborations MISAWA HOME and PAINT HOUSE, joint remodeling business

  9. Construction of Condos (Mansions ) boomed in the past 3 Years 166 192 218 223 (1,000 Units)

  10. Low Cost Housing • Low cost houses are getting popular initiated by • ”Limited 25”of Misawa Home in 2001 • 500,000 Yen / tubo( 3.3 ㎡）→250,000 Yen / tubo • 2. Followed by other medium size home builders and • franchise home builders • 3. With stagnant economy, Japanese consumers can not endure high amount of home loan (used to be 4 or 5 times of their annual income).

  11. Characteristics of Japanese Housing • Shorter Life • Price is too High • Quality, such as Energy Efficiency is not high • Resale Value of Home declines to almost Zero in 20 years

  12. Characteristics : Shorter Life Source: White Paper of Construction 1996 (Ministry Of Construction)

  13. Characteristics (Japan) First Generation Second Generation Third Generation

  14. Characteristics (Western Europe) First Generation Second Generation Third Generation

  15. Regulatory Changes in Recent Years Next Generation Energy Conservation Standard (1999) Revision of Building Standard Law(2000) Housing Quality Assurance Law (2000)

  16. Next Generation Energy Saving Standard (1999) • Stricter Energy Saving Standard closer to the R-2000 Standard of Canada, which was introduced in 1982 • Enhancing the importance of insulation and air tightness • Positively affected to Imported Houses and Building Materials

  17. Revision of Building Standard Law(2000) • Shift from Prescriptive( Specification) Code to Performance Building Code • Interim and Final Building Inspection • Setting Up of Private Building Inspection Bodies • NOTE: Enforcement Order of the BSL(Relating to Indoor Air Quality) will be enforced in July 2003

  18. Housing Quality Assurance Law (2000) 10-year Warranty on Defects on Principal Structures Housing Performance Indication System Nine Performance Indicators (Entirely Voluntary) Establishment of Housing Dispute Resolution Bodies

  19. Nine Performance Indicators Structural Stability Fire Safety Minimizing Building Deterioration Easy Performance of Building Maintenance Thermal Emvironment Indoor Air Quality Light and Visibility Noise Control Accessibility to the Elderly or the Disabled

  20. Steady Growth of Imported House

  21. The First Imported House in KobeImported from Portland Oregon in 1925

  22. Origin of Imported House(2000 F. Year) Source: Imported House Survey by METI, MLIT, JETRO, Japan 2x4 Builders Association and Imported House Industry Organization in 2002

  23. Seattle Vancouver Village in Kobe

  24. Seattle Vancouver Village in Kobe

  25. Sweden Hills in Hokkaido

  26. Imported Houses in a Small Lot

  27. 88%of Imported house, 2x4 or other Panel Structure

  28. Imported Houses are Cheaper 0,000 yen/ tubo( 3.3 ㎡）

  29. Imports of Housing Materials 99~02 (million yen) 1999 2001 01/99 Prefabricated Building (Package House) 19,299 23,108 20% Solid Wood Flooring 15,023 17,599 17% Wood Windows & Frames 6,108 5,622 -8% Wood Doors & Frames 11,711 12,226 4% Structural Laminated Lumber 15,104 25,113 66% Plastic Windows & Doors 3,076 3,402 11% Glazed Ceramic Tiles 2,906 4,328 49% Lumps & Lighting Fittings 30,103 43,814 46% Source: Japanese Trade Statistics

  30. Positive Trend of Japanese Housing Market Changing Consumers Half of Home owners are not Satisfied More information (mass media and internet) Awareness of quality of housing( more information) Durability Design Healthy house Energy efficiency Barrier free Cost consciousness

  31. 47.5% of Families are not Satisfied with their Home Source:Housing Demand Survey by Ministry of Construction(1998)

  32. Positive Trend of Japanese Housing Market Changing Attitude of Homebuilders Crisis of losing business in the future Changing attitude toward imported building materials Looking for New Building Products and Technologies Cost consciousness

  33. Survey of Home Builders Imported Housing Materials also used for Post & Beam House s and Remodeling Users Survey of Imported Housing Materials 1999 by JETRO Housing Materials Center Osaka(JHMCO)

  34. Client’s (Consumers) Demand is More Important Question: What made you use imported materials for the fist time ? Users Survey of Imported Housing Materials by JHMCO

  35. Design, Function & Price are Important Question: Why did you choose imported materials? Users Survey of Imported Housing Materials by JHMCO

  36. Problems of Using Imported Housing Materials Delivery Time 57 Quality of Materials 31 Maintenance 29 Inaccuracy 29 Treatment of Defects 27 Response to Complaint 21 Standard and Regulation 18 Installation 14 Small or No Stock in Japan 7 Lack of Knowledge 7 Question: Please specify problems of using imported materials ? Users Survey of Imported Housing Materials by JHMCO

  37. Survey of Home Builders Question: Are you going to use imported materials again? Users Survey of Imported Housing Materials by JHMCO

  38. Interested Items by Visitors to Japan Home Show 2002

  39. Interested Items at JHMCO 2002 ( Consumers and Business )

  40. Popular Items In JERTO Housing Materials Center（Osaka)

  41. Canadian Hardwood Flooring

  42. SwedishVentilation System

  43. American Wooden Windows and Doors

  44. Italian Tiles

  45. Swedish Triple Grazed Wood Windows & Doors

  46. Home Improvement and Renovation Market to Grow ( 7.3 8.0 8.7 9.3 ) Source: Ministry of LIT( Construction)

  47. Ratio of Home Renovation to Housing Investment is much Smaller in Japan ( 40.9% 44.7% 55.0% 65.1% 10.9% ) Source: Ministry of Land, Infrastructure and Transport

  48. Renovation Market is Expected to Grow Renovation Market Opportunities for Imported Housing Materials (Lesser extent of Regulatory Restriction ) Consumers’ Preference can be easily Reflected （Fear of Potential Large Scale Earthquakes in Kanato, Tokai and Nankai area)

  49. 48% of Wood Structured Detached 2F Houses , judged Very Dangerous at time of Large Earthquake Percentage of Dangerous Wood Structured 2F Houses Houses built before 1980 82% Houses built after 1981(Revised BSL) 33% 66% of People said They can not Spend more than 1 million yen (about US$ 9000) for Renovation of these Dangerous Houses Research was concluded in June 2002 by Japan House Renovation for Earthquake Organization. 45,000 houses( Average 31 years old)

  50. Home Center to Play an Important Roles in Home Improving Market More numbers of Aged Consumers to have more Free Time DIY for Enjoyment and Money Saving Home Renovation may be done by Home Owners Small Home Builders started to use Home Centers more

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