TOKYO (Nikkei)–Demand for temporary housing for victims of the Great East Japan Earthquake has proved far smaller than expected, spelling big trouble for house builders, which have been building up their stocks of construction materials at the government’s behest.
The three disaster-hit prefectures of Iwate, Miyagi and Fukushima have reduced their housing estimates by a total of about 20,000 units. At its peak, the total estimate was for 72,000 units — 30,000 for Miyagi, 24,000 for Fukushima and 18,000 for Iwate.
Based on the peak figures, Infrastructure Minister Akihiro Ohata urged the housing industry to prepare for putting up 62,000 temporary homes by the end of August. The remaining 10,000 units were expected to be secured by the prefectural governments through orders to local builders or imports.
Prime Minister Naoto Kan pledged to make sure that temporary housing would be provided to all those in need by the Bon festival in mid-August.
Not according to plan
Infrastructure Minister Akihiro Ohata, center, meets with housing industry executives on April 5 to urge them to ramp up supplies of temporary homes. In Mid-may, however, he told them that demand was smaller than expected.
But the demand situation has changed, as a growing number of people in these prefectures have started repairing their houses, relocating outside the devastated areas or expressing a desire to move into government-supplied commercial housing for disaster victims.
On May 16, Ohata told Takeo Higuchi, chairman of the Japan Federation of Housing Organizations, and other industry executives that the number of makeshift houses actually needed could be smaller than originally thought. Higuchi did not protest, but he indicated the possible need for “discussions” between the industry and the government, saying many companies had already purchased construction materials to meet the government’s request.
Soon after the meeting between Ohata and the industry executives, it was revealed that the estimates by the three prefectures had been slashed by 20,000 units. The cuts did not exactly come as a surprise for many in the industry — as they had heard the ministry say it would be difficult to meet Kan’s promise due to delays in securing the necessary land — but the revision has nevertheless created a big headache for homebuilders.
Two weeks before the meeting between the minister and the industry representatives, one industry organization involved conducted a survey of member firms, asking them about the situation concerning their procurement and production of necessary materials for temporary houses. The survey found that the production of materials for a large number of houses had already been finished.
The decline in demand has provoked anxiety among housing companies about the risk posed by excessive stocks of materials. Their concern stems from the fact that the government does not regard the demand estimates by the prefectural governments as representing formal contracts for the construction of temporary houses. The way the Infrastructure Ministry sees it, such a contract is established only when the government specifies both the construction site and the number of units.
The ministry is also playing down the significance of Ohata’s request, saying it was only a call to prepare supplies.
Prefab firms in danger
Misawa Homes Co. (1722) President Nobuo Takenaka said a cut in the order quantity would hurt the company. Misawa has already bought the materials for building 1,500 temporary houses, in line with the government’s orders, according to Takenaka.
The expected reduction in the actual number of temporary homes built will deal an even bigger blow to makers of prefabricated homes, which have received larger orders and are generally on a weaker financial footing than large housing companies such as Misawa.
— Translated from an article by Nikkei staff writer Shogo Nakatani