Nov. 18 (Bloomberg) -- Misawa Homes Co. had the biggest drop in nine months in Tokyo trading after the Japanese builder said cases of defective construction by its units were found.
Shares of Misawa Homes dropped as much as 8.9 percent to 1,504 yen, the biggest fall since Feb. 12 and were down 3.3 percent at 1,596 yen as of 10:52 a.m., local time. The stock has gained 26 percent so far this year, compared with the 39 percent advance by the 96-member Topix Construction Index.
Construction may not have been completed to specifications at 1,619 homes at three of its units, the company said in a statement dated Nov. 15 on its website. The defective homes were found at units in Chugoku area and Saga prefecture, both in western parts of Japan, and Hokkaido, north of the main Honshu island, it said.
“The biggest problem is reputation,” said Yoji Otani, a Tokyo-based real estate analyst at Deutsche Bank AG. “Homebuyers may avoid Misawa Homes in the short term.”
Misawa’s finding comes prior to the government’s plan to raise the consumption tax to 8 percent from 5 percent next April. Housing starts rose to an annualized 1.04 million units in September, the highest since September 2008, a land ministry report showed last month.
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