Declining Consumer Demand and Prolonged Holding Periods for Completed Inventory

「Although the number of properties listed in the inventory of the designated distribution organization (REINS) was trending gradually higher, supply and demand remained balanced recently, allowing a favorable environment for securing profits to continue. Meanwhile, the outlook remains difficult to predict, given potential changes in supply and demand conditions resulting from an increase in market inventory, higher construction costs due to surging raw material and energy prices, and the impact of rising mortgage interest rates on housing demand.」

「市中在庫量は低水準で推移し需給バランスが維持されていたことから、利益が確保しやすい環境となりました。」

「Although first-time buyers in regional areas remain cautious about purchasing, underlying housing demand, particularly in the Tokyo metropolitan area, has remained firm and the supply-demand balance has been relatively well aligned, allowing favourable business conditions to continue.」

「現時点においては、住宅需要は首都圏を中心に堅調に推移しており、需給バランスも改善傾向が続いていることから、当社グループを取り巻く事業環境は概ね底堅く推移するものと見込んでおります。」

「Although the decline in market inventory has begun to show signs of bottoming out, the supply-demand balance continues to improve. However, persistently high home selling prices due to soaring construction costs and other factors, as well as rising mortgage rates, could lower sentiment toward home purchases.」

「According to REINS, the number of newly built detached homes registered as inventory has declined by approximately 16% from the start of the period, indicating that the supply-demand balance in the detached-home subdivision market is gradually improving,」

「Although home selling prices continue to rise due to soaring construction costs and other factors, the gradual decline in market inventory of detached-home subdivision properties is improving the supply-demand balance.」

「Market inventory of detached-home subdivision properties remains excessive, and the supply-demand balance is expected to take some time to adjust.」

「In the real estate industry, higher home selling prices due to soaring construction costs and weaker consumer sentiment due to inflation have continued to suppress housing demand, and the number of new housing starts, including detached subdivision homes, has remained weak. Registered inventory in REINS continues to increase, and some areas have an apparent excess of market inventory.」

「Housing demand has been affected by higher home selling prices resulting from soaring material prices and declining consumer sentiment due to inflation. The number of properties registered in REINS has been increasing, and some areas have an apparent excess of market inventory.」

「As properties have become increasingly expensive, particularly in areas where property prices are relatively low, housing demand has begun to be affected, and some areas have an apparent excess of market inventory. Although variable mortgage rates remain low, future trends need to be monitored closely.」

「In the real estate industry, although the number of new housing starts, including detached subdivision homes, has remained flat, soaring building material prices have begun to make homes seem expensive in areas with lower average selling prices. Depending on trends in mortgage interest rates, there are concerns about an impact on housing demand, and the situation remains unpredictable.」

「Selling prices have risen due to soaring building material prices, and changes have begun to appear in housing demand.」

「Building material prices have been tending to rise, and higher selling prices have begun to affect housing demand.」

「At the beginning of the period, the number of newly built detached homes registered as inventory had declined by approximately 35% over the preceding 1 year, suggesting that market inventory was insufficient. As a result, the increase in the pre-completion contract rate led to higher selling prices.」

「Concerns about an economic downturn, delayed recovery, and the resulting decline in sentiment toward home purchases due to the prolonged infectious disease cannot be dispelled, and the situation remains unpredictable.」

「Concerns about a delay in or setback to economic recovery due to the prolonged infectious disease and the resulting decline in sentiment toward home purchases cannot be dispelled, and the situation remains unpredictable.」

「Against this backdrop, sales of detached-home subdivision properties by the group remained above expectations. However, as a third wave of the infectious disease emerged and its end remained unforeseeable, concerns about a further economic downturn and the resulting decline in willingness to purchase homes could not be dispelled,」

「Changes in lifestyles accompanying COVID-19 have increased interest in detached-home subdivision housing. Contributing factors are thought to include the growing number of companies encouraging working from home and the increase in time spent at home with family as a measure to prevent the spread of the infectious disease, creating demand for homes with more rooms and larger living spaces. However, it is necessary to monitor future developments to determine whether these needs will become established as the new normal.」

「In addition to adjustments in the housing supply-demand balance, concerns about declining sentiment toward home purchases have not been dispelled while the end of the infectious disease remains unforeseeable,」

「As indicated by the number of newly built detached homes registered in REINS, the real estate information network operated by the real estate distribution organisation, which increased by up to approximately 20% from the start of the period, market inventory increased and is presumed to have been excessive. In addition, amid continued year-on-year declines in consumer spending following the consumption tax increase implemented in October 2019, the global spread of COVID-19 had a material impact on the purchasing sentiment of the primary target group, and consumers appeared to be becoming more cautious about prices.」

「The business environment surrounding the group remains challenging amid the need to remain alert to the impact of the consumption tax rate increase and adjustments in the supply-demand balance.」

「Amid the need to remain alert to the impact of the consumption tax rate increase, real wages remain weak, and the business environment surrounding the group continues to be challenging, including the state of the supply-demand balance.」

「If completed homes remain unsold for a prolonged period, consumers may regard them as leftover inventory, and once more than 1 year has passed, they are treated as pre-owned properties even if unoccupied, forcing the company to respond with substantial price reductions,」

「The business environment surrounding the group remains challenging, including temporary stagnation in sentiment against a backdrop of abnormal weather and successive natural disasters.」

「The business environment surrounding the group remains challenging, including temporary stagnation in sentiment against a backdrop of abnormal weather and successive natural disasters.」

「Because the performance of our core real estate subdivision business is susceptible to purchasers' willingness to buy and demand trends, which are influenced by economic conditions, interest rates, land prices, and the tax system, any deterioration in the economic outlook, substantial rise in interest rates, increase in land prices, or change in the tax system could weaken purchasers' willingness to buy and affect the group's business performance and financial position.」