Housing Market and Housing Investment

Author Name UNAYAMA Takashi  (Consulting Fellow, RIETI)
Creation Date/NO. April 2015 15-J-013
Research Project Issues Faced by Japan's Economy and Economic Policy Part III: Heterogeneity among economic agents
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This paper aims to explain why housing investment in Japan stagnated in the 2000s. Housing investment consists of two parts: replacement and a net increase of housing stock, which can be further decomposed into changes in the number of households and the housing utilization rate. Using the Housing and Land Survey, it is shown that all of the following factors caused the decrease in housing investment: house replacement decreased due to an increasing share of non-wooden houses and collective housing; the number of households is approaching its ceiling as the share of nuclear and single-person households is saturating; and the housing utilization rate indicates the bottom, reflecting the housing market situation. As a corollary, we conclude that the effect of the consumption tax rate increase in 1997 on housing investment is limited.