Market Overview

Since FY2018, the domestic market of new detached houses has been on a downward trend, largely due to structural challenges such as a declining population and sharply rising housing prices driven by escalating construction costs. Despite these unfavorable market conditions, the segment for built-for-sale detached houses remained relatively resilient. Amid increasing housing prices, demand for affordable built-for-sale houses, such as those build by power builders (house builders that specialize in reasonable built-for-sale housing) grew steadily.  

In response to the demand, major home builders that traditionally focused on full custom homes started to invest more on built-for-sale houses in the last few years. This shift was also driven by the fact that built-for-sale houses are relatively more profitable than full custom orders, as it generally requires less time and cost for sales and design.

Noteworthy Topics

“House Makers” Offering A Wide Range of Homes

In recent years, the Japanese government has shifted focus of the Basic Housing Policy from increasing the number of houses to improving housing quality. At the same time, consumer preferences and demands have become increasingly diverse. In response to these evolving trends, house makers* have expanded their product portfolio to offer a wide range of housing options that cater to varying lifestyles and needs.

One such offerings is eco-friendly housing. Amid increasing societal emphasis on ecologically sound lifestyle, house makers are actively developing sustainable housing, such as Net Zero Energy Homes (ZEH, which aim to reduce energy consumption and environmental impact).
Additionally, to enhance consumer confidence in the face of soaring housing prices, house makers developed the “standardized (semi-order) housing” as a cost-effective yet high-quality alternative.
This type of houses is positioned between full custom order and ready-built homes. Although choices for floor layouts are restricted, the quality of materials used are similar to those used in fully customized homes. Shortened design process contributes to cost reduction, making the standardized homes budget-friendly and high quality.

*House makers: Large home builders that operate across Japan with annual closings of over 300.

Future Outlook

The hew housing starts of detached houses are forecasted to drop to 321,000 by FY2030, representing 90% of the FY2023 level. This downward trend is driven by demographic decline compounded by  increasing construction costs and mortgage rates.

Research Outline