April 2023

Akira Sugawara, Senior Executive Researcher

The Home Renovation and Remodeling Market is Steadily Becoming Mature

Although it was affected by the spread of the COVID-19 pandemic, the domestic home renovation and remodeling market shows steady growth, and the market size exceeded 7 trillion yen in 2022. (See the Chart 1.)

For better or for worse, the home renovation and remodeling industry has experienced its “booming” repeatedly in the past. Since 2020, the spread of the coronavirus infection has increased the amount of people’s “time spent at home” due to restrictions on coming and going and increased their interest in improving and enhancing their living environment. This trend has resulted in the home renovation and remodeling market being back into the spotlight and changes in the market.

 

 

Impact of the COVID-19 Pandemic on the Home Renovation and Remodeling Market

We analyzed the home renovation and remodeling market during the COVID-19 pandemic on a monthly basis. Taking the monthly average (market size) of the market over the past 10 years before the pandemic (2009 to 2018) as the baseline (0.0%), the increase and decrease in the monthly data from January 2019 to December 2021 were compared as  shown in the chart below. (See the Chart 2.)

In April 2020, the market declined sharply as home renovation and remodeling businesses were forced to take measures to cope with the voluntarily suspend operations of stores and restaurants, such as temporarily closing of stores and shortening of business hours, in accordance with the government’s declaration of the “state of emergency.” Particularly, the market size in May 2020 plunged sharply affected by the voluntary restraint in operating business since the previous month. However, after September of the same year, this trend suddenly changed. Both business operators and consumers began to “adopt” online meetings or the like, and thus the market size in the fourth quarter of 2021 (October to December) became  comparable to that of before the pandemic. This was because home renovation and remodeling  were conducted during the pandemic as much asthef time before the pandemic, and customers’ spending on works related to “housing infill” (interior works and equipment works) grew due to the increase in  people’s spent at home. However, home renovation and remodeling to make teleworking more comfortable were not popular around that time, and demand for simple and do-it-yourself improvement of the living environment using purchased furniture and home interior goods had expanded.

In 2021, the COVID-19 infection more widely spreaded. Due to repeated declaration of the “state of emergency” and issuance of “priority measures to prevent the spread of the disease,” some sort of voluntary restraint from going out had been requested by the government for a period about one-third of the year. However, the home renovation and remodeling market did not suffer a decline as it did in April to May 2020, but rather showed a positive movement.

I believe that people’s increased interest in the living environment is the reason why re-investment in the living environment including home renovation and remodeling has become more remarkable as they started to spend more time with their families based on the idea of “coexisting with the coronavirus” and they started telecommuting or working at home. Since October 2021, the strong market momentum having continued from the early autumn of 2020 slowed down slightly. Desipite thisthe market size in the fourth quarter of 2021 (October to December) exceeded the levels of all the past 10 years. In contrast to 2020, the share of “repair and maintenance of housing facilities,” which is involved in renovation and remodeling of the living environment including installation work, rather than improvement with “furniture and home goods,” expanded in 2021.

 

Changes from “the Society Coexisting with COVID-19” to “the Post-COVID-19 Period”

The home renovation and remodeling market in the coronavirus pandemic (2020 to 2021) showed steady growth even though there were some negative effects. Compared to the average market size of 6.3 trillion yen before the pandemic (2010 to 2019), the average market size during the pandemic (2020 to 2021) increased to 6.7 trillion yen. This is thought to be due to the particular demand related to the COVID-19 as well as increased demand for housing stock that is essential for renovation and remodeling. It appears that the value of the living environment has increased as the generation of Second Baby Boomers’ own houses have now been in the ages that need renovation and remodeling, and people’s desire to “enrich their lives” and “live the lifestyle suited to themselves” has been  encouraged by the spread of teleworking and increase in the time spent at home in the pandemic.

In 2022, the market expanded despite the fact that many negative factors occurred in the traditional renovation and remodeling market, such as rising prices of clothing, food, and daily necessities, and rising cost of building materials.

In the living environment coexisting with the coronavirus, people want to enrich the time spent in living spaces for both public and private lives, which is a major change compared to the pre-COVID-19 period. It is believed that the whole market has expanded because of increase in investment in the living environment (investment in home renovation and remodeling after purchasing a house) and increase in consumption related to home renovation and remodeling.

If the period from 2023 is defined as the “post-COVID-19 period,” the home renovation and remodeling market is likely to become sluggish as people become more active and consumption expenditures other than home renovation and remodeling such as spending on leisure, travel, and eating out, which have been postponed until now, are considered to gain momentum.

However, it is expected that the installation rate of energy-saving, energy-creating (solar power generation, etc.), and energy-storing (storage batteries, etc.) equipment will continue to increase steadily due to soaring energy costs and people’s increasing environmental awareness. Moreover, the growing importance of renovation and remodeling of room layout, private spaces, or the like, will be more popular as the new standard since telecommuting spread and new options for places to work appeared, and the market can maintain its popularity by discovering new needs for home renovation and remodeling. In order to maintain and further grow people’ interest in the living environment that has been rising so far, it will be important to continue to spread the related information and increase contact with current customers and potential customers, particularly through social media.