Markets in Japan for U.S. lumber products – excerpt of report prepared by the Office of Forest Products and Domestic Construction of the International Trade Administration
Markets in Japan for U.S. Lumber Products
In 1988, an estimated 45 percent of the country’s total wood consumption (about 60 percent in 1970) was directed to lumber manufacture, about three-fourths of which was used in housing construction. This usage is largely responsible for the wide fluctuations in wood demand. It is in the Japanese house that traditional wood use is mostly clearly exemplified, especially in the form of tight, even-grained, clear softwoods which are given high visibility in the post and beam type of residential construction that is most common in the country. Although the price of wood has become an increasingly important factor in the volume of its per capita consumption in recent years, the origin (domestic or foreign) of the wood per se–as long as strict quality standards are met–has become less significant to the wood customer in Japan. In 1987, a record 69.4 percent of the Japanese wood supply was provided by imports, compared to 58.7 percent in 1972. Per capita wood consumption in Japan has also been significantly affected by the general state of the national economy, which has often steered the level of wood demand of the country’s major end-users: housing construction, pulp and paper, furniture, and packaging or materials handling.
Wooden Housing Construction in Japan
Changing social and demographic patterns and the need to replace over 4 million housing units destroyed during World War II demanded the development of an efficient housing supply system for housing in Japan. The rapid migration of a significant portion of the population from rural areas to the cities in search of sustenance, further compounded the housing problem. This led to an emphasis on the quantity, rather than quality, of housing. While the national shortage in the number of housing units was essentially solved in the late 1960’s and early 1970’s as the number of housing units exceeded the number of households (in 1988, existing houses totaled about 38 million, while the number of households exceeded 33 million), the quality of Japanese housing has lagged behind that of most developed nations. In a 1986 survey by the Prime Minister’s office, 46 percent of home occupants were dissatisfied with their current residence. Thus, the theme of the governmental housing policy during the 1980’s has been to address qualitative issues such as greater space per housing unit, improved electrical and sewage facilities and the increased use of stronger, more earthquake- and fire-resistant facilities, greater use of building materials such as steel and concrete for which Japan had excess capacity, and only more recently, the increased use of wood in American-style exterior construction applications–mostly for private housing.
The Japanese homebuilding industry is among the world’s largest–the U.S. industry is the largest–although on a per capita basis Japan has had more housing starts during the past few years. Of the estimated 260 million square feet of general construction begun in 1988, about 54 percent was in housing starts, which totaled some 139.7 million square feet of floor space in about 1.7 million units, multiple as well as single-family units. The level of 1988 housing starts climbed by about 1.5 percent over the 1987 level, after earlier government and industry projections had forecast a slight decline over the period. The 1988 total floor space was at the highest level since 1973, but on a per unit basis, 1988 floor space dropped to its lowest point since the 1973 calendar year. This has been the pattern during much of the 1980’s–rising numbers of housing starts and total floor space, with declining individual home size, with a resulting decline in wood products consumption per unit. By contrast, in the United States, the trend in recent years has been toward larger homes.
The trend towards smaller housing unit averages has been attributed to a recent sharp increase in the number of smaller, apartment-type rental units (these are included in official government data on housing starts), as well as escalating real estate and building material costs (usually makes up 70 percent or more of a home’s cost). The decline in house size, which averaged 78.6 square meters in 1988 compared to about 94 square meters in 1983, has been particularly evident in nonwood homes which comprised about 60 percent of all 1988 housing starts. By comparison, the average family dwelling in the United States was about 160 square meters in 1988, or double the size of the average Japanese home in that year.
The typical plot size for a detached Japanese house (occupied by an average 3.3 persons) is one-sixth to one-third the size of a comparable U.S. house plot, or about 150 to 300 square meters.
Since the early 1970’s, the average size of Japanese wooden homes has increased by about one-half, although per unit floor space for those structures remained at a fairly constant level during the mid-1980’s. Over the past couple of decades, the annual proportion of wooden housing starts to total starts has generally declined, from about 70 percent of all housing starts in 1970 to about 41 percent by 1988. Despite a resurgence in 1986-87, the level of 1988 wooden housing starts was still down by about 31 percent compared to 1970. Higher material costs and restrictive building codes were important contributing factors to the declining use of wood in exterior Japanese housing construction over the past 20 years, as were the higher labor costs associated with traditional wood housing construction. Traditional style wood housing is more labor intensive than other types, such as 2×4 construction, and requires more highly skilled craftsman, which have increasingly been in short supply compared to other types of construction workers. Despite the cost competitiveness of wood prefab housing, in the early 1980’s the Japanese Government reportedly urged the use of steel, based on trade policy concerns. It should be noted that steel prefab housing uses domestic plywood for roofing, flooring, and wall applications. The size is mostly 3×6.
The 1986-87 resurgence in wooden and nonwooden housing construction has been attributed to recent Japanese Government policies which were initiated to encourage residential construction. Recent tax disincentives for interest income have led many Japanese to invest in real estate. Changes in building and fire codes now allow the construction of single-family three-story wooden homes in less-dense suburban areas, although a three-story, multiple-unit home (with different units on different floors) still cannot be made of wood. Inasmuch as multifamily residential construction comprises the largest share of new housing, wood products are denied access to a major market. The government also reduced its mortgage rate to 4.6 percent for small homes, about 4.95 percent for medium-size homes, and 5.3 percent for larger homes, which further encouraged the buying of a house, although implicitly discriminating against larger wood houses. On the other hand, increased loan ceilings on public financing have facilitated the building of larger wooden houses, thus attempting to encourage the government policy goal of increasing the average floor space per unit. This began to be realized in wooden homes in 1988, when the average floor space climbed to an all-time record 103 square meters per unit.
Other government initiatives to stimulate the construction of more and larger size housing units have included the development of special mortgage savings bonds to encourage greater personal savings toward buying a home, and the setting up of special training programs for carpenters and contractors to reduce building costs and teach the benefits of wood housing. While there is no shortage of Japanese housing at the present time, there is little doubt that the quality of the average Japanese home still leaves much to be desired. As one Japanese government official recently indicated, the cramped space and soaring housing costs facing Japanese consumers are still an “intolerable situation.”
The primary factors influencing fluctuating housing demand in Japan in recent years have been soaring land prices (especially in the Tokyo area and the other major urban areas), real income levels, the amount of available public financing, the level of interest rates, climbing labor costs, and the appreciation of the yen.
The decreasing yen/dollar exchange rate has also been a major element in the increase of Japanese wood imports, particularly from the United States. Relatively inexpensive freight rates (until quite recently) from the United States to Japan have also facilitated U.S. wood shipments and made them more competitive with domestic wood building materials.
Much of the driving force behind the significant rise in total Japanese housing starts over the 1986-88 period has been the dynamic increase in construction of rental housing, primarily small apartment-type units in nonwood, concrete/steel, multifamily structures. In 1988, rental housing starts were up by about 75 percent over 1985 and totaled 858,665 units, about one-half of all 1988 housing starts. Since most multifamily homes are nonwood-based structures, the main uses of lumber in these structures are confined to the under-floor construction, flooring, interior trim, fixtures, and closets. The average volume of lumber used per multifamily structure is about 20 to 30 percent of that used in single-family wooden houses. At the same time, the volume of plywood (primarily South Seas hardwood)–used mainly for flooring boards, floor structures, roof and wall sheathing, door skins, storage closet liners, separators, and interior finishing–in the multifamily home is estimated at between 40 to 50 percent of that used in single-family wood-based houses. While hardwood plywood made from South Seas species has traditionally been preferred in Japanese housing construction, use of North American softwood species is likely to increase as construction methods become more efficient and the use of panels is expanded as structural roof, wall and floor elements. The nonstructural markets, traditionally supplied by Japanese producers and now being infiltrated by products from Indonesia and Malaysia, are likely to decline somewhat.
U.S. plywood markets in Japan have been minimal, comprising nonconstruction applications such as materials handling, cooling towers, and carpet strips. There has been increasing growth in some housing applications for structural panels. Major U.S. wood export constraints have included high Japanese tariff rates, building and fire code restrictions, different construction practices, the unfairly traded plywood from Indonesia and Malaysia, Japanese subsidies to its domestic plywood industry, and panel and module sizes which differ from U.S. sizes.
One factor behind the near phenomenal growth of rental housing, especially privately funded units which have achieved nearly double-digit growth since 1983, has been the extremely generous tax breaks given to land owners who construct apartments or other rental units. These landowners can look forward to a 75 percent cut in their municipal property tax, with lower rates of inheritance and gift taxes also included in the bargain. Because of building code restrictions, this has not brought any benefit to the wood products industry. The soaring rise in land prices which has driven up sharply the taxable value of such property, has made such tax breaks essential in the absence of further land reform. This has stimulated cut-throat competition between housing construction firms for the mushrooming market for apartment buildings. Construction companies offer numerous tax and financial planning seminars to landowners in an attempt to have them put their property to “practical” use. Real estate companies have also sought to lure investors by marketing “house-apartments”–house-sized buildings divided into small apartment units. Typically, the realtor sells the investor a house containing about 10 apartments, rents the whole building from the buyer, and then re-rents and manages the apartments. Borrowing money to buy the apartments lowers the investor’s income tax burden to the point of tax exemption in some instances.
Although many Japanese real estate companies and other knowledgeable industry sources have indicated that they expect 1988 will have marked a turning point downward in the rental apartment construction boom, there has been scant statistical evidence (as of this writing) to support this forecast. But these industry sources have indicated that the Tokyo area rental housing market–the driving market force in Japanese multifamily building construction–has reached saturation levels, with tenants hard to find and vacancy rates climbing in all districts. As the result, many multiunit building construction firms have been bracing themselves for an expected fall-off in apartment unit construction by planning and investing in new housing products and technology, including the commercialization of “earthquake-proof” homes (rubber is used as a foundation material), multihousing facilities featuring health care for the residents, and other new consumer-oriented features designed to maintain growth in this sector of the housing industry. An indication of the recent strong demand for these multifamily building units was the 1987 average price of an apartment unit sold within the 23 wards of metropolitan Tokyo–about 48 million yen ($ 390,000). This compared to the average 18 million yen ($145,000) price tag obtained within the nation as a whole, and represented a 45 percent increase from the previous year’s selling price. If restrictive building codes prohibiting wood frame construction were relaxed, this would bring a significant new market to the wood products industry.
Although the land available for building construction in the Tokyo metropolitan area is at a premium, to say the least, the nation’s capital area contains some 130 square kilometers of farmland (mainly rice-growing), representing almost 7 percent of the Tokyo land area. Most of this land is in the form of tiny parcels which are taxed at only about 1 to 2 percent of the rate levied on residential activity. These low tax rates, as well as the waiver of potentially huge inheritance taxes, are ensured as long as the owners and their descendants promise to continue to farm the land for a minimum specified period (10 years). It is estimated that if all of these urban farms were converted to residential land it would increase Tokyohs housing area by more than one-third which would have a significant impact on demand for 2×4 wood frame housing. Under the Japanese tax code, up to 50 percent of the profits derived from land sales can be turned over to the Treasury, unless more land is purchased with the proceeds within 1 year of the sale. As a result, there has been little incentive for a land owner to realize the value of his property by selling it.
Public funding, which accounted for about 38 percent of the total housing starts in 1988, has represented a gradually diminishing proportion of the total funding for housing in Japan since the mid-1970’s. Of the estimated 564,000 housing starts publicly funded in 1988, about 80 percent were funded by the Government Housing Loan Corporation (HLC), which makes funds available to homeowners for both construction and mortgage loans. Although representing a smaller percentage of total Japanese public and private housing funding over the past few years, HLC funds have been on the increase in the building of new housing. This is due to lower interest rates for housing loans and increases in the maximum limit of HLC loans, as well as expansion of the system of special additional construction loans. In 1988, the HLC extended loans totaling an estimated 6 trillion yen, about one-half of which were for single-family housing. The HLC has its own specifications for the construction which it finances. Because these specifications are unnecessarily restrictive regarding wood construction, U.S. housing experts have been encouraging the HLC to review and revise its building specifications. As an example, current HLC regulations exclude housing with 4×8 panels and 2×4 framing from financing eligibility.
As a result of the U.S. initiative, the HLC is constructing a specifications project in Kobe which will include 13 two-story single detached and duplex wooden houses. All the units will feature 2×4 construction using 4×8 plywood, and will be used by the HLC as a test case for relaxing its regulations on wood housing construction and in the preparation of a construction guide for use by Japanese builders in building 2×4 houses. It is planned that builders following this guide will automatically qualify the houses for HLC loans. Additional two-story wooden houses are being constructed by the Canadians as part of the project, using contractor-designed methods. The joint Kobe building project, known as “Seattle Village,” is scheduled for completion in the sp ring of 1989. A parallel housing demonstration project, scheduled for completion in 1990 will also be constructed in the Kobe area. This planned 200 wooden housing unit complex, called “Washington Village,” is a joint venture sponsored by the State of Washington and Hyogo Prefecture of Japan, and will feature houses with 2,000 square feet of floor space versus the 1,300 to 1,560 square feet per unit in Seattle Village.
The principal U.S. showcase wooden house constructed in Japan up to the present time is Summit House, which was built in Setagaya Ward, in Tokyo during the spring of 1986 under the joint direction of the American Plywood Association and the Western Wood Products Association. This three-story, 5,400 square foot wood structure has attracted many thousands of Japanese visitors and has greatly promoted the use of 2×4 wood platform frame construction in Japan. Summit House was erected in less than 3 months, compared to 6 months required for a similar size traditional Japanese building. The project demonstrated multiple use capabilities for wood construction–living units were combined with commercial space. The demonstration was instrumental in starting the code change process to permit three-story structures.
The Traditional Japanese House
Traditional wooden post and beam construction accounts for the largest portion of existing single-family houses in Japan, although the number of traditional wooden housing starts has declined steadily over the past several years for reasons indicated earlier; namely, high wood and skilled labor costs, and restrictive wood building codes. Although recent housing surveys have indicated that potential Japanese home buyers still prefer the traditional post and beam style wooden house, this has not translated into greater demand for such dwellings. While traditional houses have increasingly consumed nonwood materials such as reinforced concrete for exterior construction, and plaster, metal, and other nonwood materials for walls, ceilings doors, and floors; it should be noted that high quality, clear-grained, blemish free wood is still used extensively for exposed interior trim in many new housing starts (wood and nonwood).
Wood continues to be one of the preferred construction materials in Japan because of its intrinsic beauty, durability, and long tradition of use. The quantity of domestically-produced sawn lumber consumed in traditional house construction has steadily declined, although there has been a significant rise in imported lumber consumption and some increase in the use of other types of wood products, such as large dimension, laminated wood sections. Laminated structural lumber has been a promising market in Japan for North American producers. The Japanese Forestry Agency is reportedly taking measures to use thinned (domestic) timber for laminated lumber and other goods. These efforts could narrow the opportunities for U.S. laminate producers, but the magnitude of any such effect is difficult to assess. In addition, there has been a serious tariff dispute concerning laminated products which has discouraged imports of such products. Lumber for use in traditional Japanese wood housing construction still represents a significant export market for U.S. manufacturers, although Japanese wood specifications and standards–with their accompanying myriad number of size variations–have been a major constraint to greater U.S. wood product sales to this market. An increasing number of North American mills are entering this market, and, if other constraints were to be eliminated, U.S. mills could supply much more of the traditional lumber market.
The traditional house uses about 18 cubic meters (7.6 MBF) of lumber and 4 cubic meters (4.5 MSF 3/8-inch basis) of plywood. Although lumber sizes can vary greatly, on the average, 4×4 inch posts (104mm by 105mm) are used between sliding doors. The posts are either clear spruce, noble fir, Japanese cedar, or domestic hinoki, (similar to American Port Orford Cedar), when available. Hemlock is a frequently used alternative due to both the limited supply and the higher price of more desirable traditional species. Horizontal beams are usually 4 1/8 inches by 12 inches by 13 feet and consist of sturdy Japanese pine or native spruce. Lower grade pine, fir, spruce, and hemlock are used primarily as structural members when they can be hidden or encased.
The traditional Japanese house has played a significant role in shaping Japanese values, and the method of construction used has been adapted, in large part, to the building of western-style houses. Traditional wooden homes, which employ either stone or, more recently, concrete for their foundations, use unpainted and exposed wood components. Constructed with a series of posts and beams–with a minimum or absence of nails–the solid walls of the traditional house appear to be the minimum absolutely necessary to provide structural integrity. All other walls are sliding and therefore removable. In contrast to traditional western houses with thick, heavy walls emphasizing a three-dimensional mode, the Japanese home appears to be almost two-dimensional. The beauty is created by the relationship of wood textures and surfaces. The predominant feature of the traditional house is the open structure, which allows the rooms to be changed as necessary for the daily living routine, or the house to have direct access to the garden to include it as part of the living space during the warmer seasons. The emphasis of the traditional house is upon openness and light, with a minimum of furniture and other clutter, in sharp contrast to most U.S.-style homes.
Most houses constructed at the present time have a traditional room in which some vestige of Japanese customs, culture, and values can be retained and observed. The remainder of the house has solid walls, doors and windows which specifically define rooms. Even the furniture, except in the traditional or “tatami” rooms, is now western style. One feature that has remained traditional, however, is the post and beam style of construction.
The 2×4 Platform Frame Wooden House
Following efforts by the North American industry, the setting up of a new building code in 1974 by the Japanese Government paved the way for the wood 2×4 platform frame house in Japan. The local acceptance and adoption of the 2×4 platform house, which utilizes North American dimension lumber and structural plywood and probably uses less wood than post and beam construction, has been slower than anticipated over the past decade. However, the pace of construction of these western-style homes has accelerated over the past several years, spurred by the success achieved by Summit House, the U.S. industry-promoted demonstration house constructed in 1986. The relatively slow acceptance by the Japanese of the 2×4 platform house, contrary to the expectations of U.S. wood products suppliers, has been attributed to (1) hesitancy on the part of the Japanese people to adapt to a new construction system, after hundreds of years of traditional building techniques using the post and beam method; (2) lack of total harmonization in the size of U.S. and Japanese wood building modules and other dimension building materials; (3) continuing problems in the inspection, reinspection and grading of U.S. lumber required for 2×4 platform construction; and (4) differences in wood quality requirements on the part of U.S. and Japanese builders.
The major advantages of the 2×4 wood platform frame house over the traditional Japanese post and beam building include: (1) greater resistance to earthquake and fire, (2) cost savings in construction (materials and labor)–excluding land costs, an 1,800 square foot three-bedroom U.S. home in Japan costs at least $180,000 to build compared to at least $250,000 for a similar-size Japanese home–and energy consumption, (3) and a significantly shorter time required for construction–the average U.S. residential house requires about 700 hours of labor compared to about 2,500 hours for the traditional Japanese home.
Nearly all of the dimension lumber used in the construction of 2×4 houses is manufactured in North America, and consists of kiln dried hemlock or spruce, pine, and fir, which are cut into standard U.S. sizes. Recent buying patterns indicate a decided preference in Japan for kiln-dried products over green products. In addition, kiln-dried products are cheaper to ship. Further, in an open market it would be difficult for Japanese producers to compete with U.S. kiln drying, given the higher energy and land costs in Japan. Some softwood plywood from North America and local hardwood plywood is used for structural panels. Houses built using the 2×4 system usually have the same general appearance as traditional homes, and include at least one traditional room, with exposed interior posts used exclusively for decorative and anesthetic purposes, rather than for structural purposes.
North American industry has not been alone in promoting 2×4 platform frame construction in Japan. The Japanese 2×4 Home Builders Association cooperated with the Japanese Ministry of Construction in building the three-story wood Summit House (under the direction of the American Plywood Association and the Western Wood Products Association). These efforts bore fruit in 1987, when the Ministry of Construction amended the building code to permit three-story wood residences in quasi-fire zones–the dense residential areas surrounding the downtown portion of the major cities. Previously, wooden buildings in these zones had been limited to two-stories. The code change is especially significant for the future of wood platform frame construction in Japan, and is just one in a series of hurdles the North American industry has had to climb to attain acceptance in Japan. It should be noted that traditional Japanese houses rely on the trained master carpenter for materials selection and construction. The master carpenter can build without the material having a JAS stamp. However, he cannot avoid the grade stamp if he builds a 2×4 or other nontraditional house.
About 15 percent of Japan’s total 1987 housing starts consisted of prefabricated units–units based mostly on panelization rather than modules–built at a factory and later assembled at the building site by a large number of mostly small building firms. An estimated 27 percent of the 1987 prefabricated housing starts were wooden units, representing a slowly but steadily increasing proportion of annual prefabricated starts; the nonwood units are constructed of steel or are concrete-based. About 55 percent of the prefabricated houses are detached or semi-detached buildings, while the remainder are multifamily, apartment-type dwellings. The top five producers of prefabricated homes account for about 80 percent of all prefabricated housing in Japan, and the top 10 firms, almost 95 percent. About 90 percent of the prefabricated home sales are in urban areas. Japanese prefab factories are highly automated, and quality control is reported to be excellent, with houses manufactured to very fine tolerances. Prefab manufacturers are, reportedly, looking carefully at 2×4 type construction, because wall units, floor units, and trusses can be factory-built and transported efficiently. Japanese prefabricated home builders enjoy excellent reputations with Japanese customers, have lower interest costs (than other builders), have developed economies of scale, and benefit from lower transportation costs than conventional builders. Because the weak dollar has eliminated some of the Japanese price advantage for finished wood products, U.S. wood exporters reportedly have been able to increase their sales to the Japanese prefab market over the past several years.
Projected Trends in Japanese Wood Housing
The level of wooden housing starts in traditional post and beam construction is projected to fluctuate during the 1990’s, perhaps climbing slightly by the year 2000; this, after peaking during the early 1970’s and then declining significantly during the early 1980’s. Per unit floor space will likely rise gradually over the remainder of this century, translating into increased wood consumption and providing added potential for larger purchases of wood products from the United States and Pacific Rim nations if impediments to trade are removed. The projected growth will further support the housing sector’s present dominant role as the major Japanese market for both domestic and imported wood products through the 1990’s. While the annual level of all new traditional-type housing starts is expected to remain flat or possibly decline slightly by the year 2000, the proportion represented by wooden starts will likely climb to about 45 percent or more of the annual total, compared to 40 percent in 1988.
U.S.-style, 2×4 wooden platform frame houses are expected to achieve increasing popularity in Japan over the next decade, with new starts projected to more than double their present level by the end of the period, accounting for almost 5 percent of total Japanese housing starts, compared to about 3 percent in 1988. There will also be a significant rise in the number of three-story wooden platform frame houses, if Japanese building codes are further adjusted to permit such construction in the surrounding suburbs and existing rules governing fire-wall separation are rationalized to allow for greater wood use in homes designated to be fireproof. Much of the current and future progress in building reform is aimed at developing construction techniques that would allow wooden structures to comply with existing regulations. Accompanying the forecasted rise in 2×4 platform frame housing will be an increase in local demand for U.S. dimension lumber and structural panels as well as greater purchases of U.S.-produced wooden home furnishings and fixtures, as the Japanese infatuation with the western life style grows. The MOSS talks have resulted in the removal of some important barriers to platform-type housing in Japan and, together with aggressive market development activities on the part of the U.S. wood products industry, should continue to facilitate and promote expanded, construction-related wood sales to Japan through the 1990’s. However, the MOSS process left many impediments to trade unresolved.
It should be noted, however, that Japanese builders have been modifying U.S.-style 2×4 platform construction to their modules. This requires the U.S. industry to devise ways to limit wood waste from the use of 4×8 panels in construction, and educate builders. This step has begun and explains the modest increase in Japanese imports of North American plywood.
Similarly, prefabricated wood housing units are expected to expand their share of the Japanese housing market by the year 2000, accounting for a projected 30 percent of all prefabricated housing starts by that year (almost 27 percent in 1987) and 7 to 8 percent of total housing starts. Japan is currently the world leader in the production of prefabricated housing and should retain that role through the next decade. Several Japanese builders might eventually establish prefabrication plants in the United States for export back to Japan, exploiting the relatively cheaper labor costs in the United States whcih have arisen from the foreign exchange differential.
The Japanese market for log homes, still quite small in 1988 (about 1,000 such units were started in that year), is projected to expand significantly during the 1990’s. Although some of these western-style log homes are also being constructed by local Japanese builders, there seems to be good export potential for U.S. manufacturers. The logs, of oak and similar durable woods, would likely be processed, shaped and assembled in the United States, and then reassembled in Japan. At the present time, most of the Japanese interest in such homes is directed to vacation-type dwellings in resort areas; but there are growing indications that the log home, which is less costly than more conventional-type wood and nonwood houses, may become more acceptable as ayear-round dwelling.
The Ministry of Construction’s announcement in June 1988 that it will make 3,000 hectares of land in the Tokyo area available for residential use over the next 10 years (1.7 times the amount made available over the 1983-88 period) could accommodate some 150,000 building lots. This could inject some needed life into the Tokyo housing market during the 1990’s and, it is hoped, slow the rapid escalation of land prices in the area by adding to the limited available supply of residential building space.
Home remodeling in Japan, as in other countries, is often seen as an effective, less costly means to improve the condition or increase the size of a house without resorting to the major investment required for the purchase of a new residence. Yet, despite the rapid escalation in the average cost of new Japanese homes and the near-prohibitive prices for land, the number of permits issued for home remodeling has declined steadily, after peaking in 1979. Likewise, the total floor space for such remodeling projects also declined. In 1988, remodeling permits dropped to an estimated level of 152,000, with an accompanying total floor area of 7.4 million square meters (the lowest such levels since 1973); this represented declines of about 29 percent and 27 percent, respectively, compared to peak 1979 levels. In 1988 about 98 percent of the permits issued were for house additions, while the remaining 2 percent were for remodeling, about the same percentages as in 1979.
Although the above data indicate a sharp downward trend in home remodeling during the 1980’s there has been a continuing, though very gradual, increase in the average floor area specified on each remodeling permit–from less than 43 square meters per unit in 1971, to almost 49 square meters in 1988. The general decline in the number of remodeling permits over the past several years has been variously ascribed to property limitations and building restrictions within the larger urban areas, which have placed significant constraints on the construction of major additions to existing housing that often occupies virtually all of the building site. In addition, because many existing houses defy current building codes (e.g. by being too close to the street), razing and rebuilding on a residential site is often discouraged by laws which grandfather existing violations but prohibit new construction. There is also a lesser tendency–judging from the statistical improvements to their houses, compared with the greater propensity of U.S. homeowners to do so.
The proportion of remodeling permits for major additions to existing homes has been significantly greater in the less congested Japanese countryside than in Tokyo and other densely populated metropolitan areas. Single-family lot sizes exceeding 300 square meters represent about one-fourth of all existing home sites in Japan with 150-300 square meters accounting for almost one-third of the total and lots of less than 150 square meters, slightly over 40 percent. However, in Tokyo, about two-thirds of all single-family lots are less than 150 square meters.
The steady decline in remodeling permits indicates an undetermined reduction in wood consumption, although there are reliable reports of a fairly strong and growing interest on the part of many Japanese homeowners to utilize more wood in various types of interior remodeling applications, especially for adding storage space (well units, shelving, closets, et.)–often at a premium in the average Japanese house. This had encouraged several major local housing contractors to establish remodeling businesses or expand them. In major remodeling projects, the demand for wood materials for posts and footings can be as high as that for new construction. In addition to traditional contractors that specialize in remodeling, several housing-related businesses have entered the remodeling market. They include electrical machinery and appliance firms, furniture and interior decorating suppliers, and department stores and specialty retailers. In the more highly congested urban areas, there has been an increasing demand for prepcut or prefabricated wood products, which can be more efficient and less costly when space constraints are the paramount consideration.
Among the many uses for wood in Japan demand is highest (about 45 percent in 1988) for lumber, about 75 to 77 percent (over 22 million cubic meters) of which is directed to building construction–about 40 percent or more of this is nonresidential construction–and, to a much lesser extent, plywood, about 55 percent of which is directed to building construction. The total Japanese consumption of lumber has generally declined over the past several years, giving way to basic nonwood alternatives such as concrete and steel, and to plasterboard, aluminum, ceramics and fabrics for interior finishing. This has been especially evident in nonresidential construction, such as office and retail buildings, where wood use has been sharply curtailed through numerous building and fire codes. Japanese building codes require noncombustable horizontal separation between staired multifamily units. This requirement prohibits wood frame construction in the largest residential construction market–multifamily housing.
These attempts to control the potential spread of fire in densely populated urban areas arise from the nation’s experiences during World War II when bomb-initiated “fire storms” consumed huge portions of Tokyo and other major cities. Wooden construction suffered even more in subsequent hasty rebuilding efforts, largely because of poorly prepared materials and inadequate construction methods. Although the traditional appreciation for the aesthetic qualities of wood was maintained, the integrity fo the performance of wood was severely tarnished. This solidified the backward image of wooden construction and paved the way for concrete and steel. In recent years interest rate subsidies and material costs have generally favored nonwood construction in the heavily populated urban areas. In addition, a slow, cumbersome system for approving new wood applications and fire-proofing and quake-resistant construction methods has limited consumption of wood. Although there are increasing indications that official attitudes on the use of wood in nonresidential buildings are changing, this remains a serious impediment to increased demand for U.S. wood products.
There have been numerous recent attempts to increase the use of wood in nonresidential (as well as residential) building projects which have been sponsored by a number of government agencies during the mid-1990’s. Specifically, with the urging of the Japanese wood products industry, increased use of wood products (within the limit of the Building Standards Law) has been promoted by the following:
There have been numerous recent attempts to increase the use of wood in nonresidential (as well as residential) building construction that include several subsidy and promotion projects which have been sponsored by a number of government agencies during the mid-1980’s. Specifically, with the urging of the Japanese wood products industry, increased use of wood products (within the limit of the Building Standards Law) has been promoted by the following:
1. The Ministry of Education provides subsidies for wood-based school buildings.
2. The Ministry of Construction has established, through the Construction Finance Corporation, lower intertest loans for a number of public wood-based housing construction projects, as well as the establishment of a regional wood-based housing construction promotion project and a technology development project. Standards were set for three-story, wood-based, prefabricated houses, the construction of which is being vigorously promoted.
3. The Ministry of Health and Welfare has promoted the increased use of wood in some 21 city and village health and welfare centers for the elderly.
4. The Ministry of Labor has instructed that there be a substantial increase in the use of wood for exterior and interior construction of its facilities.
5. The National Land Agency has set up an aid program for wood-based building construction in less-populated villages.
6. Finally, the Ministry of Agriculture, Forestry and Fisheries has funded the promotion, research and development of new uses of timber, as well as increasing the utilization of wood in its facilities and in the conntruction of wood-based model housing.
Many of these official measures were influenced by national policy to revitalize Japan’s lagging wooden building construction industry. It would likely be to Japan’s benefit if other barriers to access, discussed below, were eliminated as these actions would facilitate the improved market access and increased imports of wood products, and would better prepared domestic wood user markets for the late 1990’s when, it is planned, large-scale domestic timber plantings are expected to be harvested and added to the local wood supply stream.
EITOR’S NOTE: This article is excerpted from a report prepared by the Office of Forest Products and Domestic Construction of the International Trade Administration. The full 218-page report can be purchased from the U.S. Government Printing Office for $11, and is entitled The Japanese Solid Wood Products Market: Profile and Outlook. (Stock Number 003-009-00553-1). It can be ordered by mail using the order form on the opposite page, or by telephone at (202) 788-3238.
COPYRIGHT 1989 U.S. Department of Commerce
COPYRIGHT 2004 Gale Group