Earnings volatility risk arising from real estate market conditions, interest rates, tax policy and competition

「Although mortgage rates at financial institutions continue to rise following the Bank of Japan's gradual rate hikes, the impact on consumer sentiment of higher import prices against the backdrop of developments in U.S. tariff policy and geopolitical risks remains an issue requiring close monitoring.」

「The real estate brokerage industry saw firm transaction activity, particularly in the existing-home market. Against the backdrop of continued soaring new-home prices, consumers, especially in urban areas, are increasingly shifting their demand toward existing properties offering better value. However, signs of an adjustment phase have emerged in the Greater Tokyo existing-condominium market, with the number of contracts falling year on year in some months. At the same time, prices remain firm, with the contract price per square meter continuing to rise year on year for more than 40 months. There are also concerns that rising fixed-rate mortgage rates accompanying higher long-term interest rates could affect consumers' purchasing appetite.」

「Although mortgage rates have been gradually rising, demand for residential properties remains firm, and transactions involving high-priced properties by wealthy domestic and overseas buyers increased, particularly in urban areas. In the Ministry of Land, Infrastructure, Transport and Tourism's 2025 Public Notice of Land Prices, the national average for all uses rose 2.7% from the previous year, while both residential and commercial land prices rose for the fourth consecutive year. However, the market outlook remains uncertain due to soaring construction material and equipment prices, higher construction costs caused by labor shortages, and rising interest rates.」

「In the real estate brokerage industry in which we operate, the national average land price for all uses, including residential and commercial land, rose 1.4% year on year, marking a positive change for the third consecutive year. The rate of increase accelerated particularly in the three major metropolitan areas, as redevelopment in central urban areas and firm housing demand amid low interest rates pushed up land prices. However, buyers are increasingly holding back from purchasing properties with inferior convenience and other attributes, raising concerns that this could affect real estate prices overall.」

「In the real estate brokerage industry, demand for residential properties remained firm, supported by low mortgage rates, particularly variable rates. However, some buyers showed declining appetite in response to soaring prices, and market inventory began to increase. A clear change in supply and demand conditions was observed particularly for new detached houses in suburban areas, which have entered a price adjustment phase.」

「Japan's economy in the cumulative third quarter can be said to have entered a temporary recovery trend, supported by improvements in employment and income conditions driven by strong domestic corporate performance, firm consumption and the continuation of the negative interest rate policy. However, global economic uncertainty is increasing, due to geopolitical risks arising from military conflicts between Russia and Ukraine and between Israel and Hamas, as well as the risk of financial system instability resulting from deteriorating real estate market conditions in China. These factors are expected to have a considerable impact on Japan's economy going forward. In the real estate brokerage industry in which we operate, monetary easing and an increase in inbound tourism after the pandemic have brought funds into the market. In addition, rising construction costs and declining supply due to structural labor shortages have accelerated the surge in new-home prices, which has also pushed up existing-home prices. As the surge in real estate prices, which exceeds even the bubble-era levels, could eventually reduce consumers' purchasing power when the negative interest rate policy ends, interest rate trends will need to be monitored closely.」

「In the nationwide real estate brokerage industry, the latest prefectural land price survey, particularly for residential land, showed that land prices that had generally weakened due to the impact of COVID-19 are returning to pre-pandemic levels. Meanwhile, housing prices have continued to rise, driven by higher construction costs resulting from soaring construction material prices due to the yen's depreciation and labor shortages. Together with rising consumer prices, this has raised concerns about the impact on purchasing appetite.」

「In the real estate brokerage industry in which we operate, signs of change have emerged in housing prices, which had continued to rise for several years. In particular, the selling and contract prices of detached houses have tended to fall below the previous year's levels. While views that mortgage rates will remain low for the time being have gained ground, prices that had appeared overheated have begun to level off, and buyers also appear to be becoming less active.」

「The real estate brokerage industry continues to be supported by low mortgage rates and tax incentives for younger people, and demand for residential properties remains firm. In the Ministry of Land, Infrastructure, Transport and Tourism's 2023 Public Notice of Land Prices, the national average for all uses rose for the second consecutive year, indicating a nationwide recovery in land prices. However, the outlook for the business environment remains uncertain due to soaring construction material prices, concerns over higher interest rates and rising consumer prices.」

「Japan's economy in the cumulative third quarter remained without signs that the COVID-19 pandemic was nearing an end. While there were some signs of recovery, including the resumption of domestic travel support measures and the easing of entry restrictions for visitors from overseas, rapid inflation caused by higher import prices resulting from the yen's depreciation continued, in addition to global shortages of resources and raw materials caused by Russia's invasion of Ukraine. At the end of the cumulative third quarter, there were also developments suggesting a possible change in monetary policy, making the outlook increasingly uncertain. In the real estate brokerage industry in which we operate, prices have continued to rise amid property shortages and the inflow of funds into the market resulting from monetary easing. However, there are concerns that signs of higher long-term interest rates could negatively affect consumer sentiment, and the situation remains unpredictable.」

「In the real estate brokerage industry in which we operate, land prices are showing signs of recovery. In the prefectural land price survey, the national average for all uses turned upward for the first time in 3 years, while the national average for residential land rose for the first time in 31 years. However, concerns include the yen's depreciation, persistently high construction costs due to soaring construction material prices, and the impact of rising consumer prices on purchasing appetite, leaving the industry's future direction highly uncertain.」

「In the real estate brokerage industry in which we operate, the national average year-on-year change in assessed standard residential land values used for official road valuation turned upward for the first time in 2 years. Transaction prices have risen, supported by firm demand for residential properties. However, inventory continues to decline in some areas, and the outlook for the business environment remains uncertain amid concerns over soaring construction material prices and higher interest rates.」

「In the real estate brokerage industry, demand remains firm, supported by low mortgage rates. However, particularly in urban areas, inventory shortages caused by a decline in new listings of existing homes and rising transaction prices driven by soaring new-home prices have been observed. The outlook remains uncertain, as construction material prices continue to rise partly due to overseas supply and demand conditions.」

「In the real estate brokerage industry in which we operate, mortgage rates remain low and demand for residential properties remains firm. However, inventory has declined and transaction prices have risen in some areas, leaving the outlook uncertain.」

「In the real estate distribution industry to which the Company belongs, demand for residential properties remains firm, supported by persistently low mortgage rates. However, transaction prices continue to rise as property inventories decline, and the outlook remains uncertain as the end of the third “wood shock” is not yet in sight.」

「In the real estate distribution industry to which the Company belongs, completed transactions for both existing condominiums and detached houses have continued to increase, and transaction prices in urban areas have also been trending higher. However, negative factors affecting the supply of new homes, including the “wood shock,” remain, so the Company will continue to closely monitor changes in industry trends.」

「In the real estate distribution industry, transactions in residential properties have recently been recovering in some regions to approximately the previous year’s level. Government support also includes the extension of mortgage tax deductions, relaxed floor-area requirements and the creation of Green Housing Points under the outline of tax reforms. However, the decline in housing starts and the state of emergency declared in 11 prefectures and metropolitan areas are expected to increase downward pressure in some regions.」

「Although the nationwide average land price for all uses in the prefectural land price survey turned down for the first time in 3 years, mortgage rates have remained low, and some regions have recently seen the number of transactions in residential properties recover to the previous year’s level.」

「In the real estate distribution industry to which the Group belongs, the number of newly built detached houses and new condominiums sold in urban areas has been declining, and housing starts have also been trending gradually lower. The industry is expected to remain weak for the time being. Although the government’s measures meant that the consumption tax rate increase implemented in October 2019 did not result in extreme rush demand, consumer caution has continued since the increase, compounded by persistently high real estate prices in urban areas.」

「In the real estate distribution industry to which the Group belongs, mortgage rates have remained low, and government home-purchase support measures have helped drive particularly strong demand for existing condominiums. The prefectural land price survey has also confirmed nationwide increases in land prices. However, property prices remain high in central urban areas and elsewhere, consumers continue to be cautious in their purchasing behavior, and greater attention is required regarding the impact of the consumption tax increase.」

「Demand has remained firm in the real estate distribution industry to which the Group belongs, supported by continued low interest rates and home-purchase support measures, particularly in areas with convenient transportation and favorable living environments. Regarding the consumption tax increase scheduled for October this year, the government has announced preferential measures, so significant fluctuations before and after the increase are considered unlikely. However, prices continue to rise in some areas, mainly urban areas, including existing condominiums, and consumers remain cautious.」

「Although low interest rates continue to support purchasing sentiment, intense competition for land acquisitions in the new housing subdivision market and rising construction costs due to labor shortages have kept property prices high, particularly in urban areas. This has also affected the existing-home market, with transactions slowing in some regions and price bands.」

「Although ultra-low mortgage rates are supporting housing demand in the real estate distribution industry to which the Group belongs, property prices remain high due to soaring land acquisition prices, rising construction costs and the inflow of investment capital, and consumers remain cautious.」

「In the real estate distribution industry to which the Group belongs, property prices, particularly in central urban areas, have remained high, and consumers have shown increasingly cautious purchasing behavior.」

「Service fee revenue per franchisee may be affected by external factors, including real estate market conditions centered on the existing-home market, land price trends, interest rate levels, housing tax policies and competition with major real estate brokerage firms.」

「In the real estate distribution industry to which the Group belongs, government measures supporting home purchases and low mortgage rates have continued, and consumer willingness to purchase has remained high. Accordingly, the industry is expected to remain firm going forward.」

「In the real estate distribution industry to which the Group belongs, interest in purchasing homes has remained firm, supported by improving employment and income trends, low mortgage rates and government measures to support home purchases. However, consumers have become more cautious as selling prices rise.」

「In the real estate distribution industry, the rising cost of new homes due to higher construction costs and land prices has led to a tendency for housing acquisition demand to shift toward the existing-home market. Although overseas investment is slowing amid uncertainty in the Chinese economy, the Company expects the expansion of various government measures to promote the circulation of existing homes to further stimulate existing-home transactions and support the real estate distribution market as a whole.」

「The existing-home market has become more active, with the number of completed transactions for existing condominiums and detached houses reaching record highs. This has expanded opportunities, but competition is also intensifying.」

「In the real estate distribution industry to which the Group belongs, the nationwide average decline in land prices narrowed in the land price survey, while slight increases continued in major metropolitan areas. Housing market conditions remained firm, as housing demand was supported by continued low mortgage rates and various ongoing government measures.」

「Housing demand in the real estate distribution industry to which the Group belongs has remained firm, supported by persistently low interest rates and the continuation of government measures to stimulate the circulation of existing homes. However, concerns have emerged that supply and demand may deteriorate as property selling prices rise and supply increases, and close attention is considered necessary regarding future market trends.」

「The real estate distribution industry generally remained firm, supported by continued low interest rates. However, housing prices in the Tokyo metropolitan area, which had continued to rise, have recently shown increasing signs of reaching a ceiling, and close attention is considered necessary regarding future changes in market conditions.」

「Service fee revenue per franchisee may be affected by external factors, including real estate market conditions centered on the existing-home market, land price trends, interest rate levels, housing tax policies and competition with major real estate brokerage firms.」