Concerns Among Japanese People and the Outlook for the Japanese Real Estate Market
In Japan, the 1990s witnessed the collapse of the economic bubble. Since then, the economy has struggled to recover, and it took until July 2023, a remarkable 30 years later, for stock prices to finally surpass their pre-bubble levels. Japan also grappled with deflation during this time.
Abe Shinzo sowed the seeds
The Abe administration introduced “Abenomics,” an economic policy with three pillars:
- bold monetary easing
- flexible fiscal policies
- growth strategies
As part of these financial measures, Japan conducted
- massive purchases of long-term government bonds,
- introduced negative interest rate policies
- implemented yield curve control to keep interest rates at historically low levels.
Enjoyed low interest rates
Home loan interest rates are at zero percent
Japanese citizens enjoyed the benefits of these artificially low interest rates, especially in the housing sector, where mortgage rates linked to short and long-term interest rates were astonishingly low, sometimes as low as 0.3%.
Japanese people in a state of confusion.
However, Japanese people, who had grown accustomed to deflation and low interest rates, have found themselves feeling anxious about the recent trends of rising inflation and interest rates. Despite global inflation rates and interest rates remaining relatively low, this represents a new and challenging experience for the Japanese.
Recently, the most popular website in Japan featured an article with the headline:
“Caution: Rising Interest Rates! How to Choose the Right Mortgage?” (article is written in Japanese)
This article provides a comparison of mortgage interest rates within a range of 0.1% to 1%, highlighting the significant shift from historically low levels and prompting readers to reconsider their financial choices.
Right Time for Real Estate Investment in Japan?
In the current economic landscape, with already affordable real estate prices and the added benefit of a weaker yen, real estate in Japan is indeed a bargain. And with the onset of inflation, now is the perfect time to consider investing in Japanese real estate.
If you’re interested, don’t hesitate to contact us today for further information and advice on navigating the changing financial landscape. Your future investments may depend on the choices you make now.
(Related article:Japanese Real Estate Investment Trends and Attractiveness of Toyama)
