Housing starts rose for the first time since June 2007, government data showed Friday in a sign that the world's second-largest economy is recovering from the building slump driven by a change in construction regulations.
Ground broken on new homes and condominiums rose 19 percent in July from a year earlier, after falling 16.7 percent in June, the land ministry said. The median estimate of 29 economists surveyed by Bloomberg was for a 15 percent gain.
The figure, however, may not be strong enough to abate concern among economists that a slowdown in the global economy is forcing consumers and companies to pare spending. Residential investment fell 3.4 percent in the second quarter as rising prices prompted home buyers to shun new condominiums and banks tightened lending to developers, a report showed this month.
"We maintain a cautious stance on housing investment in the second half of the current fiscal year," which ends next March, said Takehiro Sato, chief economist at Morgan Stanley in Tokyo. "While nominal wages have not grown, property prices in urban areas have risen for the past few years, and this has undermined households' capacity to purchase homes."
Tightening of credit by banks is one reason for a flurry of bankruptcies among real estate companies, according to Teikoku Databank Ltd., Japan's biggest corporate-credit researcher.