/

Sales tax hike deferral powers surge in contracts for custom-built houses

JIJI

The number of contracts for custom-built homes surged in September, chiefly due to a spike in demand by people taking advantage of a deferral in the consumption tax hike set for April.

Sekisui House Ltd., based in Osaka, saw its contracts surge 74 percent from a year before. The number of contracts at Tokyo-based Mitsui Home Co. grew 69 percent and at Sumitomo Forestry Co. of Tokyo by 65 percent.

Osaka-based Daiwa House Industry reported an increase of over 50 percent, while Asahi Kasei Homes Corp., a Tokyo-based unit of Asahi Kasei Corp., saw 48 percent growth.

The spike has been prompted by a special measure allowing the 5 percent sales tax rate to be applied to houses built on contracts concluded by the end of September, even if deliveries take place after April.

“Those who had been thinking about building or rebuilding homes for months have made up their minds ahead of the end of the September deadline,” said a Sumitomo Forestry official.

Some contractors increased their incentives, including discounts, to boost sales in an apparent effort to spruce up their books for the fiscal first half that ended last month.

The 5 percent consumption tax will also apply to custom-built homes based on contracts concluded this month or after, provided the homes are completed by the end of next March.

But major house builders, which already have order backlogs, are unlikely to be able to complete construction by the end of March, an official at Sekisui House said.