Even as North American lumber prices have retracted somewhat over the past few weeks, “woodshock” remains the most talked about issue in the Japanese construction industry. Continued shortages of structural lumber for zairai homes is leading to fears of an industry slowdown since builders will not be able to build. Meanwhile, some builders are said to be simply refusing to even quote projects as they cannot predict material costs and thus, they do not want to commit themselves to projects that they will likely end up losing money on. Despite such bleak concerns, some positive winds have also begun to blow.
First off, with the great concern over woodshock in the industry, the mainstream media has begun covering the situation as well. While normally the industry would not want such negative coverage that could potentially scare away buyers, the fact that those in the market to build a new home are made aware of the increasing costs by an independent source even before they step into the showroom is making it easier to pass on price increases. This in turn is finally allowing distributors and suppliers to convince the builders to accept current pricing, creating a more positive and more financially sustainable market situation.
The backdrop of this is changing dynamic is that Japanese housing starts increased in March for the first time in 21 months. This was followed by the second consecutive monthly increase in April, with a surge of 7.1% over the same month in 2020. The increase can be seen as the market recovering from the previous year’s decline in demand after the sales tax increase. However, builders are also reporting more sales activity in suburban areas as people look for larger residences that include home offices to meet their new “remote-work” lifestyles. As remote work is further gaining in acceptance here, a shift the suburbs and rural areas could help buoy starts over the mid-term.
While reduced showroom traffic during the recent 4th wave and a possible Olympic fueled 5th wave combined with an actual lumber shortage induced construction slowdown could weaken housing starts again over the summer, the current positive signs point to a more robust housing market once vaccination programs here stabilize the COVID situation.