Japan’s housing starts fell to the lowest level since the nation celebrated its postwar recovery by hosting the Olympics in 1964, as builders were hobbled by dwindling household incomes and sustained deflation.

Construction companies broke ground on 788,410 homes last year, 27.9% fewer than in 2008, the Land Ministry said today in Tokyo. That was the lowest since 751,429 recorded in 1964. The pace of decrease eased in the past four months.

The report highlights a decline that’s likely to see Japan lose its place as the world’s second-largest economy to China this year.