Japanese housing construction sector slows

Country:  Japan

5 March 2008

Japanese housing construction levels fell at the slowest pace in seven months in January 2008, as the impact on economic growth from a change in building regulations weakens.

The number of new homes and condominiums has slipped 5.7% from a year earlier (January 2006), according to the Japanese Land Ministry.

Investment levels however, has risen slightly over the past four months. This follows the government’s decision to relax regulations in November 2007, aimed at averting the recent housing slump, from negatively impacting on economic growth, in what is the world's second-largest economy.

"Housing starts will finally stop being a drag on the economy this quarter," said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. "Now we need to see how strong demand for housing investment is and how much it can lift the economy."

Editor’s comment
It looks as though the recovery in Japan’s house building sector is underway, although it is not yet clear how long the revival will take.

Japan’s property market is not very attractive to British investors at the moment, because the sterling has taken a mauling against the Japanese Yen. Money Corp report that over the past three or four months the UK pound's worst performance has been against the low-yielding Japanese Yen. The sterling has fallen by 10% against the Japanese currency.