Fluctuations in Real Estate Demand Due to Economic Conditions, Interest Rates, Land Prices, the Tax System and Other Factors

「During the interim consolidated accounting period, the Japanese economy continued on a gradual recovery path, with personal consumption and corporate capital investment remaining firm against a backdrop of robust inbound demand and an improved income environment supported by continued wage increases. However, the economic outlook remained uncertain due to unstable foreign exchange market movements, geopolitical risks, trends in real wages associated with inflation, and concerns about changes in domestic and overseas monetary policy.」

「The outlook for the economy remains uncertain due to geopolitical risks, including the prolonged Russian invasion of Ukraine, global inflation, monetary tightening and the weak yen.」

「During the cumulative second quarter of the current consolidated fiscal year, the Japanese economy was on a gradual recovery trend, supported by strong corporate investment appetite and inbound demand driven by the weak yen. However, wage growth has failed to keep pace with advancing inflation, and personal consumption has tended to stagnate, leaving the outlook for the economy uncertain.」

「During the cumulative first quarter of the current consolidated fiscal year, social activity moved toward normalization and the economy showed signs of a gradual recovery as restrictions related to COVID-19 were eased. However, the outlook for the economy remains uncertain due to global energy costs, substantial and broad-based price increases including resource prices, and the historically rapid depreciation of the yen in the foreign exchange market.」

「The outlook for the economy remains uncertain due to global energy costs, substantial and broad-based price increases including resource prices, and the historically rapid depreciation of the yen in the foreign exchange market.」

「During the cumulative third quarter of the current consolidated fiscal year, the Japanese economy saw various restrictions eased after COVID-19 was reclassified as a Class 5 infectious disease, and social activity moved toward normalization. However, broad-based price inflation, including higher raw material prices, has continued in Japan against a backdrop of the prolonged depreciation of the yen and global inflation, leaving the outlook for the economy uncertain.」

「During the cumulative second quarter of the current consolidated fiscal year, Japan's economy saw restrictions on activity related to COVID-19 gradually eased and social and economic activity move toward normalization, while personal consumption recovered moderately. However, against a backdrop of global price increases, not only raw material and energy prices but also the prices of daily necessities, including food, rose in Japan, leaving consumer sentiment and the economic outlook uncertain.」

「The economic outlook remains uncertain due to the prolonged situation in Ukraine, broad-based and significant price increases including resource prices, and the historically rapid depreciation of the yen in the foreign exchange market.」

「The spread of COVID-19 has made the recovery outlook for personal consumption difficult to assess. In addition, the prolonged situation in Ukraine, broad-based and significant price increases including resource prices, and the historically rapid depreciation of the yen have prolonged the uncertainty surrounding the economic outlook.」

「Meanwhile, the outlook for the economy remains uncertain due to soaring resource prices, including lumber, resulting from the prolonged situation in Ukraine and the rapid depreciation of the yen in the foreign exchange market.」

「Meanwhile, the outlook for the economy remains uncertain due to soaring resource prices and financial market turmoil resulting from Russia's invasion of Ukraine.」

「Housing starts totaled 73,414 units in November 2021, up 3.7% year on year, marking 9 consecutive months of year-on-year growth. By type, owner-occupied housing totaled 25,329 units, up 5.5% and increasing for the 13th consecutive month; rental housing totaled 26,819 units, up 1.4% and increasing for the 9th consecutive month; and for-sale housing totaled 20,813 units, up 6.5% and increasing for the 2nd consecutive month. Signs of recovery have emerged in the group's core sales and rental business areas.」

「However, if economic conditions deteriorate, incomes decline, interest rates or land prices rise, tax systems or policies change, or financial institutions change their lending stance toward real estate investment, customers may become less willing to sell or purchase properties, which could affect the operating results and financial position of the group.」

「Following the declaration of a state of emergency from April onward due to the spread of COVID-19, economic activity was disrupted, events and travel were curtailed, and consumer willingness to purchase declined. Domestic economic conditions have been sharply depressed and the slowdown has intensified, with severe conditions expected to continue. The global economy has also been slowing rapidly due to U.S.-China trade issues, concerns over slowing economies in China and Europe, and the impact of the COVID-19 pandemic. As the impact of the infection is expected to continue for the time being, the outlook remains uncertain.」

「In the real estate industry, in which the company operates, housing starts totaled 63,105 units in February 2020, down 12.3% year on year, marking 8 consecutive months of decline. By type of housing relationship, owner-occupied and for-sale housing increased year on year, while rental housing declined. In the group's core rental business, there are also signs that rental housing starts may have reached a ceiling.」

「Meanwhile, uncertainty surrounding overseas economies, including developments in trade relations between the United States and China and the UK's exit from the EU, has increased. Japan also raised its consumption tax in October 2019, but the company expects the impact on housing demand following the tax increase to be moderated by government measures, including expanded housing loan tax relief, enhanced housing benefits and the Next Generation Housing Point System.」

「Although investment appetite for real estate is expected to benefit from the revitalization of the real estate market ahead of the Tokyo Olympic and Paralympic Games to be held in 2020 and from low interest rates resulting from monetary easing, the company expects the economy to enter a recession after the end of these events.」

「At the same time, it is necessary to monitor developments in trade relations between the United States and China and in the UK's negotiations to leave the EU, as well as their impact on the global and Japanese economies.」

「At the same time, we need to continue monitoring the potential impact on the global economy of factors such as interest-rate hikes by the U.S. Federal Reserve and concerns that U.S.-China trade frictions may persist.」

「If economic conditions deteriorate, incomes decline, interest rates or land prices rise, tax systems or policies change, or financial institutions change their lending stance toward real estate investment, customers may become less willing to sell or purchase properties, which could affect the operating results and financial position of the group.」