The Outlook for the Housing Market in an Era of Population Decline
-Steady Growth Continues on Strength of Greater Emphasis on "Quality"-

Overview

Amidst expectations that Japan's population will begin to decline in the near future, fears have surfaced that the housing market is also set to shrink. Projections of the long-term trend in the number of housing units based on forecast change in the number of households by household age and housing format, in terms of both stock and flow, reveal the following characteristics.

On the stock side, although the stock of owner-occupied housing among elderly households is set to rise, the stock of housing among households in the 20-39 year age band is likely to register a sharp fall reflecting the downward trend of the birthrate, especially in the area of rented housing, and for this reason the total stock is likely to peak around 2015 and thereafter begin a slow decline.

On the flow side, focusing on the number of construction starts in owner-occupied housing alone, the likely scenario is of a decline in flow among younger households and an increase in flow among elderly households, just as on the stock side. However, against the backdrop of a sharp fall in fresh demand from younger households, the overall fresh demand is likely to peak earlier than the stock, in around 2010 and thereafter enter on a fairly rapid decline.

Thus, although the number of housing starts is inevitable, the two following factors are likely to offset the decline and, in the medium term, it is likely that the gentle growth of the housing market will continue. Estimates based on certain assumptions suggest that the market for owner-occupied housing is likely to grow by approximately 23% over the 15 years to 2015.

(i) The amount of residential space per person will rise, boosting the gross floor area of housing available.
(ii) Demand for the extension and rebuilding of existing properties is likely to rise in conjunction with the sharp increase in the number of elderly households living in owner-occupied housing.

If there is to be a positive response to this growth scenario for the housing market, it is important that there be (i) a shift of emphasis in the supply of housing, from quantity to quality and (ii) greater provision for the needs of elderly households.

For more information on the content of this report, please contact: Hideki Matsumura the Japan Research Institute, Limited.

Tel: 03-3288-4524
E-mail：hideki.matsumura@jri.co.jp