On October 6th, the Tokyo Metropolitan Government released housing start statistics for August 2021.
The number of overall new housing starts in August was 10,972 (down 13.0% year on year), the first decline in nine months for the prefecture year on year (YoY).
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Source: Tokyo Metropolitan Government (Japanese Only)
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Note - The chart above is only showing 2021 month-on-month data whereas the article is referring to monthly year-on-year comparisons.
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By type of use, custom home starts increased for the ninth consecutive month to 1,476 units (up 13.8% YoY) while the number of rental housing starts decreased for the third consecutive month to 5,450 (down 19.9% YoY).
The overall number of residential subdivision starts (including condos and subdivided house starts) has decreased for the first time in two months to 4,021 (down 7.3% YoY).
Breaking the overall down, the number of condo unit starts decreased for the first time in six months to 2,480 (down 18.5% YoY), while the number of subdivided house starts increased for the first time in 14 months to 1,490 (up 16.9% YoY).
Drilling Tokyo prefecture down by region, housing starts in the three wards of central Tokyo rose to 1,352 (up 290.8% YoY), the first increase in two months.
Three central wards as defined by the Tokyo Metropolitan Government are Chiyoda, Chuo and Minato wards.
In the ten central wards of Tokyo, the number of starts decreased for the second consecutive month to 3,126 (down 12.5% YoY).
Ten central wards are Chiyoda, Chuo, Minato, Shinjuku, Bunkyo, Taito, Sumida, Koto, Shibuya, Toshima wards as defined by the Tokyo Metropolitan Government.
The total number of starts in the 23 wards decreased for the first time in seven months to 8,781 (down 17.1% year-on-year YoY).
Housing starts in the cities west of the 23 wards in Tokyo prefecture saw a rise for the first time in three months to 2,168 (up 8.1% YoY).
Definitions
Custom Home Starts refers to a single plot and house being developed by one owner.
Subdivided House Starts refers to when a developer purchases a large plot of land and resells parcels with similarly constructed houses.
Regarding condominiums, if 1 building has 100 units, that means 100 Condo Unit Starts.
Subdivided Other refers to any subdivided property not covered in the above.
Resi Rental Unit Starts refers to units developed for the sole purpose of generating rental income.
Why are Housing Starts Significant?
Housing starts are a barometer of the overall health of an economy; if starts rise then it means developers and their bankers are confident enough to build houses or condos and assume there will be buyers to purchase at the other end of the process.
Alternatively if housing starts show a decline, it is usually interpreted as the opposite. In this case, the banks will be hesitant to lend to developers, throttling their ability to start construction projects and would rather wait until circumstances are better.
This particular metric is important because construction can take a year or more meaning decisions made now on whether to commit to building and whether the minimum sell price estimates for the finished units look achievable is reflective of the short to mid term economic sentiment.
Also, housing starts are indicative of commodity and labour demand as they pertain to homebuilding.
