Photo/Illutration Building material from Russia at an auction in Kamagaya, Chiba Prefecture, on March 31 (Tomoya Fujita)

Lumber prices have reached record highs in Japan since economic sanctions were imposed against Russia, leading to expectations of a spike in housing costs in the years ahead.

Russia accounts for more than 80 percent of Japan’s imports of wood veneer sheets, which are used to make plywood boards. Nearly 20 percent of Japan’s imports of rafters, which are used to build home roofs, also come from Russia.

The Russian building materials are known for their strength.

But Japanese construction companies have halted orders for Russian wood amid waves of economic sanctions against the country for its invasion of Ukraine. Some of the companies say they want to avoid tarnishing their image through any association with the aggressor in the war.

Osamu Nagashima, who heads the Sakura Office real estate consultancy in Tokyo said the situation concerning housing materials could accelerate the trend of rising home prices.

“The cost of constructing a home became 5 to 10 percent more expensive amid the coronavirus pandemic,” he said. “It would rise another 5 to 10 percent in the future if building material prices keep soaring and home builders reflect the rises in their offerings.”

The Bank of Japan’s report on the corporate goods price index for March, released on April 12, showed lumber prices shot up nearly 60 percent year on year to reach their highest levels.

Experts cited a combination of factors behind the surge, such as a global shortage of ocean shipping containers since last year and rising demand for housing in the U.S. market.

But the expected paucity of Russian housing material in the coming months has also contributed to the rise, according to industry officials.

On March 31, red pine rafters, each 3 centimeters by 4 cm, from Russia were quickly sold out at an auction of building materials held by Maruu Wood Marketing Co. in Chiba Prefecture.

The company said its stock of red pine rafters from Russia were now all taken.

“Many customers bought twice as much volume as before to secure their inventory,” said Hideo Nakajima, an official operating the auction.

The rafters fetched a price almost double that of last year and 20 percent more than the price of home-grown cedar rafters of the same shape, according to the company.

A Tokyo trading company specializing in lumber decided to halt imports of Russian rafters in early March.

“We notified our supplier that it does not need to ship the wood we had a contract for,” a company official said. “We did not want to damage our image” by continuing to use Russian lumber.

Open House Development Co., a leading home builder based in Tokyo, had similar concerns.

“It would pose a risk to our company’s image if we continued to use material from Russia,” Hirofumi Towa, head of the company’s construction department, said.

Open House Development has enough Russian lumber in its inventory to last until summer. But it may soon look for different suppliers for autumn and afterward, the company said.

Lumber is not the only building material seeing a surge in prices.

The cost of aluminum is also increasing due to the yen’s depreciation to its weakest level against the U.S. dollar in nearly 20 years and concerns about a shortage in supplies from Russia.

Housing makers, however, may be forced to opt out of raising home prices.

“Consumers’ wages remain stagnant and interest rates are on an upward trend,” said Daisuke Fukushima, an analyst at Nomura Securities Co. who is familiar with the housing market. “Large home builders may weather the difficult times by maintaining home prices at the current level because they do not want to be stuck with unsold homes.”

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