Demand for Renovation Expected to Grow - The Rising Age of Housing Stock -
July 18, 2007
The average age of housing in Japan is rising. The average age of detached houses, for example, rose from 17.2 years in 1983 to 23.0 years in 2003. This report examines the background to the trend and considers its impact on the housing market.
The increasing age of housing is largely due to a rise in the number of families continuing to occupy the same owner-occupied housing alongside a fall in number of houses being scrapped and rebuilt. The downturn in the number of houses being scrapped and rebuilt stems chiefly from the deterioration in income conditions caused by a stagnant economy and a rise in the proportion of elderly households, among which the scrap-and-rebuild ratio is lower. Looking to the future, the declining birthrate offers little hope of growth in purchases of new builds which means that the negative impact of population aging on scrap-and-build demand will grow and it is highly likely that the average age of housing will continue to rise.
The increasing age of housing is likely to stimulate demand for renovation work. Assuming certain conditions, the rise in the number of older housing units is likely to generate a 9.3% increase in the number of units being refurbished over the 10-year period from 2003 to 2013. On a regional basis, the bulk of this increase is likely to be concentrated in and around major cities.
Given that renovation budgets tend to be greater for older housing, over the decade to 2013, the growth in value of the market for renovation is likely to be greater than the growth on a unit basis, reaching 12.7%. Moreover, even in regions where the market is expected to decline on a unit basis, it is likely that the market will grow on a value basis.
For more information on the content of this report, please contact Hideki Matsumura, the Japan Research Institute, Limited.