Japan’s home renovation market expanded to 7.3 trillion yen in 2022. Even during the pandemic, it showed no signs of decline as demand for renovations and refurbishments increased due to new lifestyles and work styles. There are several factors that could lead to growth in the market such as rising prices for new homes, a shift in Japan’s housing policy, and its goal to become carbon neutral by 2050.
There are other factors that could give Japan’s home renovation market a push. One is the age and quality of Japan’s housing stock. Over 50 percent of dwelling units were over 24 years as of 2018 and a large share did not meet the newest thermal insulation standards. Home modernization, disaster prevention, and Japan’s goal to become carbon neutral by 2050, paired with home renovation subsidies and prices for new homes staying high, could therefore become a key driver for growth in the market.
Japan’s growing and ageing housing stock
When it comes to buying a home, consumers in Japan prefer new buildings. One reason for this is Japan’s housing policy of the past decades which has encouraged new housing construction. As a result, the market for second-hand homes and renovations is rather small compared to Europe and the United States, and Japan is faced with a massive and aging housing stock comprised of over 62 million housing units. Amid the declining population and the growing share of vacant homes, the government has recently adjusted its housing policy to revitalize the second-hand home market and effectively utilize the existing housing stock. As part of these efforts, it subsidizes home renovations and has introduced a home inspection system to provide consumers with reliable information on used homes.Recent developments and drivers for the renovation market
A recent surge in prices for new homes could lead to a change in consumer attitudes towards used homes and benefit the renovation market. As soaring material and labor costs are making new homes more expensive, buying a second-hand home and renovating it could become a more attractive option for potential homebuyers. The rising prices for new real estate are not the only factor that could lead to growth in the home renovation market. New life and work styles are believed to have kept up demand for remodeling during the coronavirus (COVID-19) pandemic. As people spent more time at home, adjusting to the new normal led to increased demand for home improvement.There are other factors that could give Japan’s home renovation market a push. One is the age and quality of Japan’s housing stock. Over 50 percent of dwelling units were over 24 years as of 2018 and a large share did not meet the newest thermal insulation standards. Home modernization, disaster prevention, and Japan’s goal to become carbon neutral by 2050, paired with home renovation subsidies and prices for new homes staying high, could therefore become a key driver for growth in the market.
