On April 28th, The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) released their statistical survey of housing starts for 2021.

The original Japanese data is linked below at the bottom of this article.

The number of new housing starts in 2021 was 865,909 starts, up 6.6% from the previous year, marking the first increase in three years. 

The floor area of new housing starts also increased for the first time in three years to 71.611 million square meters, up 7.3% from the previous year.

By type of use, custom home starts increased for the first time in three years to 281,279 units (+6.9% YoY). 

Rental housing increased for the first time in five years to 337,752 units (up 9.2% YoY).  

Overall housing starts for sale increased for the first time in three years to 248,384 units (+3.9% YoY). 

Within the overall housing starts for sale number, condo starts decreased 5.0% to 102,762 units and detached houses increased 11.4% to 144,124 units.

Why are Housing Starts Important?

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.

Further Reading

MLIT 2021 Nationwide Housing Starts Results Announcement (Japanese only; April, 2022)