Asian and African Studies XV, 3 (2011), pp. 3–21 3 UDK: 316.334.56(520) COPYRIGHT ©: TOMOKO KUBO AND YOSHIMICHI YUI Transformation of the Housing Market in Tokyo since the Late 1990s: Housing Purchases by Single-person Households Tomoko KUBO and Yoshimichi YUI  Abstract This study aims to clarify the correlation between the transformation of the Japanese housing market and the increasing number of single-person households in Japan, with a special focus on the supply of compact condominiums. In order to achieve the above- mentioned purpose, the changes in the Japanese housing market and diversification of the Japanese household structure are described. Finally, the features of the supply strategies of condominium suppliers, which reflect the diversification of the household structure and increasing need for condominiums by single-person households in central Tokyo, are examined. Keywords: transformation, housing market, single-person households, condominiums, Tokyo Izvleček Študija skuša razjasniti povezavo med preobrazbo japonskega nepremičninskega trga in naraščujočim številom samskih stanovanj na Japonskem, s posebnim poudarkom na ponudbah kompaktnih lastniških stanovanj. Da bi to lahko dosegli, so v članku opisane spremembe v japonskem nepremičninskem trgu in diverzifikacija japonskih gospodinjskih struktur. Nenazadnje pa raziskuje članek tudi prihodnost ponudbene strategije lastniških ponudnikov, ki odseva raznolikost gospodinjskih struktur in naraščujočo potrebo po lastniških samskih gospodinjstvih v Tokiju. Ključne besede: preobrazba, nepremičninski trg, enoosebno gospodinjstvo, lastniško stanovanje, Tokio  Tomoko Kubo, Ph.D., Urban Geographer, Meiji University, Tokyo, Japan. E-mail address: tmk200430258@yahoo.co.jp Yoshimichi Yui, Ph.D. Professor, Graduate School of Education, Hiroshima University, Hiroshima, Japan. E-mail address: yyui@hiroshima-u.ac.jp Tomoko Kubo and Yoshimichi Yui: Transformation in Housing Market in Tokyo 4 1 Introduction Changes from suburbanization to population recovery in central Tokyo caused a dramatic transformation of not only urban land use but also in people’s lifestyle. People moved into central Tokyo in order to enjoy the diverse cultural lifestyle. After the 1990s, there are notable changes of housing market in urban areas in Japan: diversification of housing market occurred corresponding to new housing needs from increasing small-size households in central Tokyo, they have been marginalized in the Japanese housing market since the 1950s. Condominium supply contributed to drastic changes in central Tokyo (Yabe 2003; Tomita 2004), which led to increased homeownership by single-person or dual-career couples. Since the late 1990s, the diversity of the housing market in central Tokyo has contributed to residential segregation, thereby resulting in a marked transformation in this area’s residential structure (Miyazawa and Abe 2005). This study’s goal is to clarify the correlation between the transformation of the urban housing market and the diversification of the household structure in Japan, with an in-depth focus on increased condominium supply and homeownership by single-person households. In order to clarify the above-mentioned issues, this study first, describes the changes in the Japanese housing market as well as the diversification of the household structure since the 1950s. Second, changes in the household structure and features of homeowners, as well as homeownership by single-person households, are explained. Finally, the features of the supply strategies of condominium suppliers, which reflect the diversification of the household structure and the increasing desire for condominiums among single- person households in the central area of Tokyo, are examined. The following section of the study reflects information collected from interviews of members of “major developers,” the largest condominium suppliers in Tokyo. 2 Changes in the Japanese Housing Market 2.1 Beginning of the Urban Housing Market From the 1950s to the 1960s, there was a drastic demographic shift from rural to metropolitan areas in Japan. This caused a serious scarcity of housing in metropolitan centers. In order to soften the effect of the demographic shift and to address this issue, the Japanese government established various housing programs. Asian and African Studies XV, 3 (2011), pp. 3–21 5 In 1950, the Japanese Housing Finance Agency began financing home ownership for high-income households. The Japan Housing Corporation (now the Urban Renaissance Agency) was established in 1955 to develop collective housing estates for middle-class households. Rented houses and public housing were also provided for low-income households (Japan Federation of Housing Organizations 2002; Kageyama 2004). The ideology of homeownership has increasingly gained greater currency (Hirayama and Ronald 2007). The rate of homeownership at the beginning of the 1960s—and continuing into recent years—was 60%, compared to 22% in major cities in 1941 (Ronald 2008). Since the 1960s, because escalating housing prices caused a scarcity of affordable housing in most urban centers, housing estates were developed in suburban areas (Hasegawa 1997; Matsubara 1982). Detached houses in the suburbs attracted an increasingly large volume of middle-class nuclear families with similarities in income, life-stage status, and housing preferences (Yui 1991). Those who commuted to city centers tended to move after the occurrence of various life events, e.g. marriage, and relocated to the suburbs when they purchased housing (Kawaguchi 1997). Householders who did not own properties in metropolitan areas, and who moved from the countryside, rushed to the suburbs, thereby causing a rapid spread of suburbanization in Japan (Tani 1997). Small households, such as those comprising single women, have long been marginalized in the suburbs as well as in the Japanese housing market (Kageyama 2004). Soaring land prices in the 1980s, and the so-called “myth of real property,” strengthened the preference for detached houses in the suburbs (Japan Federation of Housing Organizations 2002; Van Vliet and Hirayama 1994), while condominiums were considered temporary residences to be bought prior to the purchase of detached houses. According to the “Housing and Land Survey (Statistics Bureau of Japan 2008),” housing construction increased rapidly from 1970 to 1995, the commonly- named “suburbanization and bubble-economy period.” In this period, the supply of detached houses was dominant, followed by that of rented apartments. As many people experienced living in apartments in the 1960s, the percentage of people who purchased condominiums steadily increased (Statistics Bureau of Japan 2008). Tomoko Kubo and Yoshimichi Yui: Transformation in Housing Market in Tokyo 6 Condominiums are relatively new form of residence in Japan: they were developed as a form of luxury residence in the late 1950s, and because of the various strategies adopted by condominium suppliers, condominium supplies were divided into two segments. The first segment comprised expensive condominium supply in metropolitan centers and prefectural centers developed by some major condominium suppliers, e.g. Daikyō Co. Ltd. The other segment comprises the affordable condominium supply in the suburbs developed by the private railroad enterprises, e.g. Tōkyū Corporation, presently Tōkyū Land Corporation. (Matsubara 1982). 2.2 Increase in Condominium Supply after the 1990s Land prices in Japan fell after the collapse of the “bubble economy” in 1992. Consequently, large pieces of land, originally used for company housing or factories, were sold and purchased by urban developers, including condominium suppliers. In order to soften the effects of a prolonged recession, the government adopted policies designed to promote housing construction, e.g. low interest rates. Moreover, liberalized housing loans and lowered housing taxes helped prospective homebuyers to afford such properties (Nakazawa 2006). Private developers preferred to oversee a healthy supply of condominiums, rather than housing estates (mostly comprising detached houses in suburbs), since properties in the heart of cities were frequently sold and purchased during this period. This supply was triggered by redevelopment projects around core stations, as well as the on-site development of factories, commercial areas, and leisure centers (Real Estate Economic Institute 2002). This type of urban development focused on new condominiums that had both attractive and unattractive dimensions (Hirayama 2005). The attractive residential areas were concentrated in metropolitan centers, central areas of local cities, and suburbs. After the late 1990s, the most sought-after residential areas tended to cluster where the condominium supply was the highest. According to case studies conducted in the central areas of local cities in Japan, there are three types of condominium residents: (1) young, married couples with children, who tend to have grown up in neighboring areas and are expected to inherit real property from their parents; (2) single-person households (mainly Asian and African Studies XV, 3 (2011), pp. 3–21 7 single women), who wish to achieve independence by purchasing housing; (3) middle-aged or retired couples, who move into condominiums in convenient areas after their children have left home (Sakakibara et al. 2003; Hirose 2000; Otsuka 2005; Kagawa 2007; Kubo 2008). Basically, condominiums are preferred by small-sized households in Japan, e.g. single-person households, married couples without children, and elderly couples. With the diversification of household structures and lifestyles in Japan (Aero 2006), the role of the condominium is becoming increasingly important in the Japanese housing market. 3 Changes in Household Structures and Condominium Supply in Tokyo In this chapter, the diversification of household types in Tokyo is examined. Changes in condominium supply, related to the diversification of the features of household types in Tokyo, are then clarified. 3.1 Diversification of Household Structure From 1985 to 2005, the Japanese household structure underwent change. The number of nuclear families and married couples with children decreased gradually (see Figure 1); however, married couples and single-person households increased at a rapid pace. During this period, there was a diversification of household structure, particularly among single-person and married-couple households. Surveys conducted by the Ministry of Land, Infrastructure, Transport and Tourism (2001 and 2003) relating to condominium residents in central Tokyo revealed the following statistics related to the household structure of residents: married couples without children (33.4%), nuclear families with school-age children (20.0%), and single women (19.5%). According to the same survey, the previous residences of condominium owners were primarily located in either the same ward as their current residences at the time of the survey (32.2%) or in the peripheral wards of Tokyo (31.3%); moreover, most of the residents had moved within the 23 Tokyo wards. Tomoko Kubo and Yoshimichi Yui: Transformation in Housing Market in Tokyo 8 Figure 1: The number of households by household types, 1985–2005. (Source: Statistics Bureau of Japan “Population Census 1985–2005”) In the beginning of the 2000s, households comprising single people in their late 20s and 30s have begun moving into central Tokyo. From 2000 to 2005, there was a dramatic increase in the number of single women in their 30s and early 40s who bought homes (Kubo and Yui 2011a). Although single men in the same age group and same time period also showed a remarkable increase in such activity, the volume was not as high as that in the single-women category. The large number of single-person and nuclear households in five core Tokyo wards (Chūō, Chiyoda, Minato, Shinjuku, and Shibuya wards) in 2000 and 2005 indicated a clear population increase in all core wards, as well as a dramatic increase of single-person households in Shinjuku, Minato, and Chūō wards. With regard to the condominium supply in this period, Figure 2 provides an important correlation between increasing population and condominium supply. Shortly after the collapse of “the bubble economy,” the supply of condominium decreased. Asian and African Studies XV, 3 (2011), pp. 3–21 9 From 1999 to 2005, when young single-person households in their home- purchasing phase increased in central Tokyo, condominium supply also increased dramatically; a portion of this single-person group is believed to have purchased condominiums. During this period, the average price per square meter fell down, but the condominium supply in the five core wards increased; thus, it may be inferred that affordable condominiums in convenient locations were being sold. Figure 2: Number of the condominiums supplied and their average price per square meter in central Tokyo, 1993–2009. (Source: Real Estate Economic Institute, “Condominium Market Trend Search, 1993–2009.” Revised version of Figure 1 from Kubo and Yui 2011a) Note: Surrounding wards denote 18 wards excluding 5 core wards (Chūō, Chiyoda, Minato, Shinjuku, and Shibuya wards) in Tokyo. 4 Supply of Compact Condominiums and Condominium Purchase by Single-person Households Since the late 1990s, and corresponding to the diversification of household structures in central Tokyo, various types of condominiums have been supplied. In particular, the supply of “compact” condominiums—comprising small-size living spaces, such as studio and/or small-sized, owner-occupied housing units—has increased. Tomoko Kubo and Yoshimichi Yui: Transformation in Housing Market in Tokyo 10 Originally, compact condominiums were supplied for single women in their 30s or 40s, who had been marginalized in the housing market in Japan. Since the late 1990s, studio-type condominiums were sold by middle-sized condominium suppliers for single-person households, and approximately 70% of them were purchased by single women (Yui 2000). Single women who purchased the condominiums were not necessarily rich and professional workers. They chose owner-occupied residences because the monthly rent of their previous residences was so high that occasionally the monthly mortgage payment was less than, or equal to, the rent. Thus, they wanted to improve their living condition by purchasing their own house. Moreover, they must have also evaluated the facilities available in condominiums as compared to those of rental apartments (Yui 2003), and concluded that condominiums have better provisions. In Japan, there have been a limited number of residences suitable for the housing needs of single-person households since the 1950s onwards; therefore, condominiums tended to better fulfill their needs for security and ease of commuting (Kamiya et al. 2002). Wakabayashi et al. (2002) considered the residential choices of single women in their 30s in the Tokyo metropolitan area and found that they purchased condominiums for the purpose of asset formation and retirement preparation. Yui (2003) clarified that single-women who purchased condominiums were mainly in their 30s, and that their annual income ranged from five to seven million yen. They saved approximately 20% of their funds for purchasing houses, and this enabled them to make a decision to purchase condominiums—they used their saving for purchasing condominiums, and their monthly loan repayment was as much as the rent for their previous residences (Kubo and Yui 2011a). High rent in central Tokyo also stimulated homeownership by single women in their 30s or 40s. As condominium purchases by single women became an extraordinary phenomenon, major condominium suppliers also began to sell compact condominiums in central Tokyo. 5 Supply of Compact Condominiums by the Major Developers In this section, supply strategies of compact condominiums by the major developers are examined. First, basic characteristics of major developers in Asian and African Studies XV, 3 (2011), pp. 3–21 11 Tokyo’s housing market are examined. Then, their compact-condominium supply strategies are clarified. 5.1 Characteristics of the Major Developers in Tokyo’s Housing Market “Major developers” is a group of eight, large-sized condominium suppliers who occupy the largest share of the condominium market in Japan (Real Estate Economic Institute 2009). These suppliers are Daikyō Incorporated (Daikyō), Mitsui Fudōsan Residential (Mitsui), Sumitomo Realty & Development Co., Ltd. (Sumitomo), Nomura Real Eatate Development (Nomura), Mitsubishi Estate (Mitsubishi), Tōkyū Land Corporation (Tōkyū), Tōwa Real Estate Development Co., Ltd. (Tōwa), and Tōkyō Tatemono (Tōkyō T.). Figure 3: Condominiums supplied by the major developers in central Tokyo, 2000–2009. (Source: Real Estate Economic Institute, “Condominium Market Trend Search, 1993– 2009”) Although each company dominates certain areas in the Tokyo metropolitan area, the major developers build condominiums in all areas of central Tokyo and are the dominant real estate developers in terms of both volume and quantity Tomoko Kubo and Yoshimichi Yui: Transformation in Housing Market in Tokyo 12 (Figure 3). Daikyō and Tōwa prefer developing condominiums in the surrounding wards or the suburbs of Tokyo. Sumitomo, Mitsui, Tōkyū, and Mitsubishi predominantly develop condominiums in the central areas of Tokyo; while Nomura and Tōkyō T. sell in all areas of the city. Figure 4 presents the percentage of condominiums sold by the major developers from 1993 to 2009 as compared to the entire condominium supply in central Tokyo. As indicated by the figure, commencing in 2002, the percentage of condominiums sold in the five core wards exceeded 15%, and the trend remained strong from 2006 to 2007. This reflects the time period in which the major developers began building compact condominiums in the central areas of Tokyo. Figure 4: Percentage of condominiums sold by the major developers in the total supply of condominiums in central Tokyo, 1993–2009. (Source: Real Estate Economic Institute, “Condominium Market Trend Search, 1993–2009”) Note: Surrounding wards denote 18 wards excluding 5 core wards (Chūō, Chiyoda, Minato, Shinjuku, and Shibuya wards) in Tokyo. 6 Supply Strategies of Compact Condominiums by Major Developers Major developers built a special brand of compact condominiums. Tōkyū Land Corporation was the pioneer in this endeavor and began selling its compact-brand series “QUALIA” in 2002, with a total of 1,718 housing units sold from 2002 until 2009; this activity was followed by developments built by Tōkyō T., Nomura, Mitsubishi, and Mitsui (Kubo and Yui 2011a). Asian and African Studies XV, 3 (2011), pp. 3–21 13 Initially, single women in their 30s and 40s formed a prime compact- condominium target market group; however, major developers struggled to fulfill the housing needs of this group. The following aspects were preferred by single women: (1) protection of their privacy during their house-hunting tours, or when they consummated their sales transactions; and (2) acceptance of and adherence to their housing requirements, and modification of the details of their respective housing units accordingly. Major developers embraced women’s housing needs by cooperating with interior shops that were popular among the young women, and by modifying the interiors of the housing units to meet, accommodate, and satisfy the young women’s individual aesthetic housing needs. Figure 5 indicates the distribution of compact condominiums sold by the major developers. Compact condominiums tend to be built in Tokyo’s core wards, with “Ochanomizu,” “Ebisu,” and “Ginza” being the most popular areas. These are well-established areas with a mature culture and a wide selection of restaurants and bars that cater to single women. In order to get the price down of each housing unit, developers tend to build small-size condominiums in high-price areas. By reducing the utilized space, housing prices can remain affordable, particularly for single women. In addition, single women pay strict attention to security; they prefer that their residences be located close to busy, well-lit streets and situated near restaurants and other similar establishments that remain open well into the evening. Since the developers, as well as single women, are able to satisfy their respective needs in central Tokyo, compact condominiums play an important role in the housing market in this area of Tokyo. However, after 2005, the condominium market witnessed a decline owing to the recession in the U.S., thereby resulting in the average price of condominiums exceeding the budgets of single women. Moreover, during the same period, central Tokyo was reevaluated and declared to be a residential area; thus, its popularity among nuclear families, single men, and young and elderly couples increased. According to Japan’s 2005 population census, women tended to live in the western part of Tokyo, such as the Meguro, Setagaya, and Suginami wards. On the other hand, men had a tendency to live in the eastern part of Tokyo in the Ōta and Sumida wards. Thus, in view of this gender-based distribution, compact Tomoko Kubo and Yoshimichi Yui: Transformation in Housing Market in Tokyo 14 condominiums tended to be sold in the western part of Tokyo, or in some attractive areas in Eastern Tokyo. As single men start to purchase condominiums, however, the supply areas of compact condominiums expanded within central Tokyo as a whole. Figure 5: Location of branded compact condominiums built by the major developers in Tokyo, 2000–2009. (Source : Real Estate Economic Institute, “Condominium Market Trend Search, 2000–2009.” Revised version on Figure 7 from Kubo and Yui 2011a.) Under these circumstances, the major developers adopted three types of supply strategies, and condominium supply in Tokyo diversified in terms of prices and location. First, some suppliers, who mainly sold luxurious condominiums in central Tokyo, e.g. Mitsui, made their special brand of luxurious compact condominiums. Single women, rich and special profession workers, purchased them to enjoy cultural lifestyle and reduce commute time. Second, some developers started to supply affordable compact condominiums in Tokyo’s peripheral wards, e.g. Tōwa. These condominiums were purchased by lower middle-class, single people who lived on the outskirts of Tokyo. Tōwa also sold compact condominiums in Yokohama city, Kanagawa prefecture. Asian and African Studies XV, 3 (2011), pp. 3–21 15 Finally, the sale of tower-type condominiums began in the 2000s, and continues to date. These condominiums comprise large and small housing units, as well as luxurious penthouse suites. The suppliers sell a variety of housing types in one tower, with single-person household opportunities as well. This strategy was implemented and utilized by Nomura Real Estate Development Corporation (Nomura). Compact condominiums were originally sold to single women; however, gradually developers accepted residents of many types in terms of household structure, life-stage status, income, and/or location. Each company of major developers had different goals and strategies that fit their individual identity and goals; hence, each selected the most appropriate strategy in implementing their respective objectives. Ultimately, major developers were able to supply a multitude of different types of compact condominiums in central Tokyo. Diversification of the supply strategies of major developers has directly contributed to the positive transformation of Tokyo’s housing market and this has led to the metamorphosis of the residential structure in central Tokyo. 7 Conclusion The objective of this study was to clarify the correlation between the transformation of the Japanese housing market and the increasing number of single-person households in Japan, with a special focus on the supply of compact condominiums. In order to achieve the above-mentioned purpose, the changes in the Japanese housing market and diversification of the Japanese household structure were described. Finally, the features of the supply strategies of condominium suppliers, which reflect the diversification of the household structure and increasing need for condominiums by single-person households in central Tokyo, were examined. The following part of this conclusion contains a discussion on the transformation of residential structures in central Tokyo, using the results from this study. Condominiums are a relatively new form of owner occupation in Japan, having first been sold in central Tokyo in the 1950s as luxury residential structures. From the 1960s to the 1980s, suburbanization occurred in Japan, thereby resulting in condominiums being built in the suburbs as affordable residential structures. During this period, private railroad developers also supplied housing estates along Tomoko Kubo and Yoshimichi Yui: Transformation in Housing Market in Tokyo 16 their railway lines. Middle-class residents moved into suburban housing estates, which included detached houses and affordable condominiums. After the 1990s, land prices declined in central areas, and large pieces of land, which were originally used for company housing or factories, were converted into condominium developments. In central Tokyo, small pieces of land were used for the development of compact condominiums, and with the enrichment of their residential functions, these areas were reevaluated by diverse types of residents. Single-person households, particularly single women, have long been marginalized in the Japanese housing market. Therefore, there were limited possibilities for women to purchase houses that suited their housing needs. The results from this study indicate that major housing developers attempted to conform to the needs of small-sized household, including single women, thereby providing single-person households with the opportunity to satisfy their individual ideal housing needs in central Tokyo. Due to the diversification of supply strategies by major housing suppliers, the housing markets in central Tokyo have been transformed, thereby resulting in a wide range of alternatives for owner-occupied housing in central Tokyo that fully meet homeowners’ needs, demands, and expectations. Ultimately, it is important to note that Tokyo is a unique global city. In other metropolitan areas in Japan, the supply of compact condominiums is limited; conversely, Tokyo offers ample job opportunities and accepts diversity of lifestyle (Kubo and Yui 2011b). In addition, the transformation of the urban residential structure in Tokyo differs from that which has occurred in many Western cities. Central areas are evaluated in Western countries, and the discussion of gentrification, or “livable city,” is increasing its importance (Ley 1996; Lees 2008). When wealthier, in other words gentry, people move into low-income and working class communities, gentrification occurs. Compared to Western countries, the residents of compact condominiums in Tokyo are not always wealthy or professional workers. Basically, the housing real estate market in Tokyo is characterized by a weak, second-hand market—less mobility after purchasing the house and less diversity of ethnicity or class. In addition, housing customs, based on the traditional patriarchal family system, still affect the decision to purchase housing in many Asian and African Studies XV, 3 (2011), pp. 3–21 17 local cities. A future study is planned for examining and fully addressing these remaining issues. Acknowledgments A portion of this study was revised and modified by Kubo and Yui (2011a, b), authors of this document. This study was financially supported by a JSPS Grant-in Aid for JSPS Research Fellow (Kubo Tomoko, 23/7412) and a Grant-in Aid for Science Research by JSPS (Yui Yoshimichi, 20300295). 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