JAPAN’s HOUSING

During the past three years, while new home construction has slowed or stopped in many countries, the construction of new homes in Japan has actually increased. This after nearly a decade of stagnation brought on by the economic crash in the early 1990s and the lingering after effects which have kept overall economic growth and consequently investment in capital intensive items such as homes to a minimum. The new period of economic growth (Japan is one of the first nations to emerge from the 2008-2009 recession) has been particularly evident in the housing boom which began in 2004 and has continued through this period. Within this new housing boom, the manufactured housing segment accounts for nearly 15% of all new homes built and this number has been increasing year after year from 2005 through today. After cresting in 1987 at 17.8% of all new home construction, the manufactured housing segment contracted during the recession years to as little as 8% and only began to emerge from this slump after strenuous efforts on the part of designers, manufactures, and retailers. The following is an examination of the manufactured housing resurgence in Japan, its causes and the prospects for future growth in this important segment of the Japanese housing market.

With the end of the Pacific war in 1945, the Japanese were facing an unprecedented housing shortage having lost nearly 4.2 million units to the allied bombing campaign which left the vast majority of urban areas completely destroyed. The end of the war brought further pressure to the housing market with a pronounced baby boom which continued for nearly a decade following 1945. These factors lead to the largest new home building period in Japanese history. Many of these new homes, particularly in urban areas, were early examples of prefabricated housing utilizing advanced manufacturing and distribution techniques of the day. However, the overall quality of these homes, as can be imagined from the haste with which they were erected, was quite low. Later trends during the 1960s and 70s favored site-built and more personalized homes built to new government enforced standards for both materials and design.

Political and Industrial Consultant The next manufactured housing boom did not begin again until the late 1970s with the advent of large scale home manufacturing companies. These companies, which include many of the major manufacturers of today such as Sekisui, Misawa, Daiwa and National, all emerged under the guidance of the government which had recently adopted a new goal of improving the overall quality of Japanese housing and had created a new nationwide building code in 1976. The nature of the nationwide building code favored manufactured homes since they could be built to code more efficiently, sold and assembled at any location within the country with little or no need for regional modification. Combined with an emerging revolution in building materials and manufacturing processes, this saw the increase of manufactured homes as a force in the Japanese home building market with nearly 1 in 5 new homes being factory-built and assembled on site by 1987.

The so called “Bubble” period in Japan, which lasted through the 1980s, saw the generation of massive new wealth domestically and abroad. As a consequence of this new affluence, the demand for new home construction skyrocketed. The greatly increased demand for new homes drove the manufactured housing market of this period to new heights. The end of this period of growth effectively left Japan with an overabundance of new homes and the resulting decline in price and large scale new construction ended the manufactured housing surge by the early 1990s.

The ground work was laid for resurgence in the Japanese manufactured housing industry by the advent of new lending policies from banks which traditionally lent to individuals through their companies, but were now more willing to lend on a large scale to individuals and families. A new policy of personal lending ushered in greater access to accumulated capital which had built up during the recession period through high levels of personal savings as well as a great reduction in the price of land in urban areas. The new lending policies gave independent consumers the ability to purchase new homes on a large scale once more.

The primary driving force behind the reemergence of the manufactured home as a desirable choice for the average consumer in Japan has come from within the industry itself. The decade long recession during the 1990s forced the manufactured home makers to radically alter their product lines as well as their marketing strategies. This restructuring has lead to a series of innovations in design as well as a concentrated industrywide marketing campaign to reshape the idea of manufactured homes in the minds of consumers.

The main design innovations have come to be known in the USA as “The Green Revolution”. In Japan, where energy resources are far scarcer and much more expensive than in the USA, greater energy efficiency has been a driving force in new home technology and design development for some time. Many manufacturers have teamed up with green energy firms in Japan to integrate high efficiency energy systems into the basic designs of new homes. These green designs have a great deal of appeal to Japanese consumers. Such innovations as total solar roofing, individual wind generation devices and ultra high efficiency insulation have made these homes models for efficiency, not just in Japan but internationally as well. For many years there has been a very strong trend in Japan for ever greater energy efficiency. With the energy cost increases that the world witnessed during the 2002 and 2007-2008 oil market climbs, the fact that the Japanese manufactured home makers offer the highest level of energy efficiency as a standard feature of their homes at a very competitive price compared to site built homes, increased not only their overall market share, but helped to dramatically improve the image of manufactured homes in the eyes of the public.

Another significant contributing factor to the increase in market share for the Japanese manufactured home industry was a recent marketing campaign undertaken within the industry with the support of government to reshape the image of manufactured homes among the public. This carefully orchestrated campaign included a broad-based media blitz and was supported by input and money from all leading manufacturers, retailers and construction companies involved in the industry. The campaign succeeded in changing the image of manufactured homes from cookie cutter suburban blight to one of homes which are on the cutting edge of technology and efficiency. The emphasis was not on price difference, which is generally 15-20% less than a site-built home with an average price range in manufactured models from $130,000 USD to $200,000 USD, but rather on the many design and aesthetic features of manufactured homes deemed to be most environmentally cutting edge and “green”. The resulting public exposure to these aspects of manufactured homes, as opposed to singular focus on cost competition, had a significant impact on consumer interest in these products.

The reemergence of the Japanese manufactured housing industry from their decade long slump is a direct result of their co-operative efforts and unity in the face of the prevailing market. The industry wide decision to move away from cheaper lower efficiency homes and to focus their efforts on higher-end models has allowed the industry to regain its footing and compete with site-built homes. This has given manufactured homes a very advantageous new position within the Japanese market. Through the combination of resources and a conscious industry-wide move towards meeting future market trends, the Japanese manufactured housing industry is poised to continue their latest renaissance for many years to come.

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