Shrinking housing market, population decline, and surging construction costs

「新築市場の縮小･中古市場の拡大」

「In the housing industry to which the Group belongs, housing prices remained high because construction costs stayed elevated against a backdrop of rising building material prices and labor costs. Combined with rising mortgage rates, this made the environment for consumers seeking to acquire homes increasingly challenging.」

「In the housing industry to which the Group belongs, the revised Building Standards Act came into force in April 2025, affecting housing starts through delays in building confirmations and the backlash following rush demand. Nationwide new housing starts announced by the Ministry of Land, Infrastructure, Transport and Tourism continued to decline year on year in monthly terms. In addition, housing prices remained high due to rising construction costs, including building materials, resulting from the weaker yen and other factors, as well as surging labor costs. The rise in housing loan interest rates further increased the difficulty consumers face in purchasing homes. Against this backdrop, the operating environment surrounding the small and medium-sized housing businesses nationwide that make up the Group's customer base, including builders, became even more challenging, and cases increased in which cash flow deteriorated due to declining creditworthiness and other factors.」

「According to the nationwide new housing starts announced by the Ministry of Land, Infrastructure, Transport and Tourism, the owner-occupied housing market continued to contract and new housing starts continued to decline year on year in monthly terms. The operating environment for the small and medium-sized housing businesses nationwide that make up the Group's customer base, including builders, became challenging, their creditworthiness declined, and cases increased in which their cash flow deteriorated.」

「According to the nationwide new housing starts announced by the Ministry of Land, Infrastructure, Transport and Tourism, owner-occupied homes, including custom-built homes, continued to decline year on year in monthly terms. The operating environment for the small and medium-sized housing businesses nationwide that make up the Group's customer base, including builders, remained challenging, and cases increased in which their creditworthiness declined and cash flow deteriorated.」

「According to the nationwide new housing starts announced by the Ministry of Land, Infrastructure, Transport and Tourism, owner-occupied homes, including custom-built homes, continued to decline year on year in monthly terms. The operating environment for the small and medium-sized housing businesses nationwide that make up the Group's customer base, including builders, remained challenging, and cases increased in which their creditworthiness declined and cash flow deteriorated.」

「According to the nationwide new housing starts announced by the Ministry of Land, Infrastructure, Transport and Tourism, owner-occupied homes, including custom-built homes, continued to decline year on year in monthly terms. The operating environment for the small and medium-sized housing businesses nationwide that make up the Group's customer base, including builders, remained challenging, and cases increased in which their creditworthiness declined and cash flow deteriorated.」

「Price increases for consumers have not kept pace with inflation in raw materials. In particular, the small and medium-sized housing businesses that construct new homes and make up the Group's main customer base operate on a build-to-order basis, putting them in a challenging operating environment amid inflation.」

「The operating environment became challenging for housing businesses, including builders and other companies constructing owner-occupied homes, primarily custom-built homes, which make up the Group's main customer base. Cases increased in which price increases could not keep pace with rising raw material costs, resulting in tighter cash flow.」

「The operating environment became challenging for housing businesses, including builders and other companies constructing owner-occupied homes, primarily custom-built homes, which make up the Group's main customer base. Cases increased in which price increases could not keep pace with rising raw material costs, resulting in tighter cash flow.」

「The operating environment became particularly challenging for housing businesses, including builders and other companies constructing custom-built homes, which make up the Group's main customer base. Cases increased in which price increases could not keep pace with rising raw material costs, resulting in tighter cash flow.」

「The global surge in lumber prices that occurred at the beginning of the consolidated fiscal year was temporary, but the rise in lumber prices was prolonged by surging global resource prices and the weaker yen. Housing prices also rose, but cases increased in which price increases could not keep pace with higher raw material costs, heightening the risk that businesses would have difficulty securing profits and maintaining cash flow to continue their operations, leaving them in a difficult situation.」

「The global surge in lumber prices that occurred at the beginning of the cumulative consolidated third-quarter period was temporary, but lumber prices remained high compared with historical levels and housing prices also showed an upward trend. However, housing business costs increased by even more, heightening the risk that businesses would have difficulty securing profits and maintaining cash flow to continue their operations, leaving them in a difficult situation.」

「However, the operating environment surrounding small and medium-sized housing businesses, the Group's main customer base, continued to be far from optimistic. The global surge in lumber prices that occurred at the beginning of the cumulative consolidated second-quarter period was temporary, but lumber prices remained high compared with historical levels. Housing prices also rose, but the costs associated with the housing business increased by even more, heightening the risk that housing businesses would have difficulty securing profits and maintaining cash flow to continue their operations, leaving them in a difficult situation.」

「However, global lumber prices surged during the first half of the cumulative consolidated period under review and, although they eased during the second half, lumber prices remained high compared with historical levels, while housing prices also showed an upward trend. Small and medium-sized housing businesses, the Group's main customer base, are expected to continue facing a challenging operating environment due to rising construction costs and shortages of construction workers. The risk has increased that they will have difficulty securing profits and maintaining cash flow to continue their businesses, leaving them in a difficult situation.」

「Japan's population and household numbers are expected to continue declining, and new housing starts are also expected to remain on a declining trend over the medium to long term. If the Group continues to rely excessively on the sale of housing loans and housing defect insurance for new homes, this could have a material impact on its future business performance.」

「In the housing-related industry, the Group's main business area, consumer sentiment toward home purchases showed signs of partial recovery due to factors including low mortgage rates, various home-purchase support policies, and the spread of working from home. However, the environment for new orders in housing sales and construction remained difficult, and new housing starts continued to fall below the previous year's level. Although difficult business conditions caused by rising construction costs and shortages of construction workers are expected to persist, the outlook is expected to remain uncertain, including the possibility that consumer sentiment toward home purchases may remain depressed over the long term due to employment concerns and other factors.」

「New housing starts continued to fall below the prior-year level, and the environment for new orders in housing sales and construction remained challenging.」

「In the housing-related industry, which is a major business field of the Group, new housing starts remained on a declining trend. Cases of delays in construction work and handovers increased due to delays in the manufacture and distribution of housing components, visitor numbers at housing showrooms and other venues fell sharply, and sales activities to secure new orders stalled.」

「In the housing industry, the operating environment improved gradually as corporate performance recovered moderately on the back of the government's financial and economic measures, and employment and income conditions continued to improve. However, the new-build housing market is expected to contract as population and household numbers decline and the number of vacant homes increases. The labor shortage is also becoming increasingly serious, while labor costs and the cost of construction, including building materials and housing materials, are rising, making the securing of profits a common industry-wide challenge. In addition, amid the spread of COVID-19, housing-related businesses that are customers of the Group face concerns including deteriorating cash flow due to declining new construction orders amid a rapid deterioration in business sentiment and delays in construction work caused by delays in the production and delivery of building and construction materials. Their operating environment is expected to remain challenging.」

「In the housing-related industry, the Group's main business area, demand related to home purchases showed resilience against the backdrop of government support measures for home purchases and the continuation of negative interest rates. However, new housing starts remained on a declining trend due to factors including tighter lending standards at financial institutions.」

「In the housing-related industry, the Group's main business area, demand related to home purchases showed resilience against the backdrop of government support measures for home purchases and the continuation of negative interest rates. However, new housing starts remained weak due to factors including tighter lending standards at financial institutions.」

「In the housing-related industry, the Group's main business area, demand related to home purchases showed resilience against the backdrop of government support measures for home purchases and the continuation of negative interest rates. However, new housing starts remained on a declining trend due to factors including tighter lending standards at financial institutions.」

「In addition, the labor shortage, which has become increasingly serious each year, and rising material and labor costs are expected to be followed by a decline in domestic consumer demand after the consumption tax increase. As a result, the operating environment for housing-related businesses, which are customers of the company, is expected to remain challenging.」

「Demand related to home purchases showed signs of resilience, but new housing starts were on a declining trend, and the outlook was far from optimistic.」

「In the housing-related industry, demand related to home purchases remained firm against a backdrop of improving employment and income conditions, continued government assistance measures for home purchases and negative interest rates. However, the number of new housing starts was trending downward, and the outlook was by no means optimistic.」

「In the housing-related industry, our Group's principal business field, demand related to home purchases remained firm due to improving employment and income conditions, the continuation of government assistance measures for home purchases, and mortgage rates remaining at extremely low levels as a result of the impact of negative interest rates and other factors. However, the number of new housing starts showed signs of weakening, and the outlook was by no means optimistic.」

「In the housing-related industry, our Group's principal business field, demand related to home purchases remained firm due to improving employment and income conditions, the continuation of government assistance measures for home purchases, and mortgage rates remaining at extremely low levels as a result of the impact of negative interest rates and other factors. However, housing construction showed signs of weakening, and the outlook was by no means optimistic.」

「The housing industry is currently experiencing rapid market changes and is entering a period of market contraction, while the costs of building materials and labor are rising. As the trend toward contraction in the new-build housing market due to declining household numbers and population becomes increasingly clear, housing-related businesses need to establish new business models.」