Orders for custom-built homes plunged in value in October, following a surge in the previous month to avoid the consumption tax hike next April, according to data from builders.
Asahi Kasei Homes Corp., a unit of Asahi Kasei Corp., saw its contracts, including for houses for rent, plunge 32 percent from the year before, compared with 48 percent growth in September.
Sekisui House Ltd. saw a 16 percent drop, against a 74 percent surge, while Sumitomo Forestry Co. posted a 30 percent decrease.
The current consumption tax of 5 percent is applied to housing contracts signed by the end of September, even if delivery is made after the tax is raised to 8 percent in April.
Orders at Daiwa House Industry Co. remained at the same level as a year before.
Many contracts were for delivery by the end of next March and will be subject to the current 5 percent rate, company officials said.
Looking ahead, Sumitomo Forestry President Akira Ichikawa said the outlook is unclear and the company will act on the assumption that demand will drop.
But some industry officials expressed optimism, citing government assistance for homebuyers and low interest rates.
“The downside will be limited,” as many consumers apparently want to sign contracts early in anticipation of higher interest rates and house prices ahead, Asahi Kasei Homes President Masahito Hirai said.