Japan housing starts may drop to a 48-year low as a sluggish economy discourages homebuyers, Takeo Higuchi, head of the country’s largest home builder, said.

Annual starts could slump as low as 600,000 in 'coming years,' Higuchi, chief executive officer of Daiwa House Industry Co., said. Starts are likely to drop more than 20% to 800,000 in the current year ending March.

'The property market will remain sluggish for another year or two because Japan’s economy is in bad shape,' Higuchi said in an interview this week. 'High unemployment and falling wages are scaring away many potential buyers.'