On March 4th, the Tokyo Metropolitan Government released statistics on housing starts for January of 2022.

New housing starts in the month totaled 9,250 units, down 11.0% Year-on-Year (YoY), the first decline in two months.

By type of use, owner-occupied housing starts increased for the first time in two months to 1,252 units (up 3.7% YoY). 

Rental housing increased for the first time in three months to 5,188 units (up 8.1% YoY). 

Houses for sale decreased for the first time in two months to 2,758 units (down 37.1% YoY). 

The number of condominium starts declined for the first time in two months to 1,315 units (down 56.8% YoY), while the number of single-family homes increased for the sixth consecutive month to 1,412 units (up 9.5% YoY).

By region, starts in the three central wards of Tokyo increased for the first time in three months to 538 units (up 57.3% YoY).

According to the report, the three central wards are Chiyoda, Chuo and Minato wards.

The ten wards of central Tokyo decreased for the first time in two months to 2,229 units (down 18.7% YoY). 

According to this report, the ten wards include the above three plus Shinjuku, Bunkyo, Taito, Sumida, Koto, Shibuya and Toshima wards. 

The total number of housing units in the 23 wards of Tokyo was 7,238 (down 5.9% YoY), a decrease for the third consecutive month. 

The non-23 ward cities of Tokyo saw the first decline in four months with 1,983 units (significantly down 26.2% 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.

Further Reading

Tokyo Metropolitan Government Housing Start Data (Ongoing; Japanese only)