Real estate loans in Japan hit record ¥7 trillion in April-September period
Date：2016/11/29
Nov 16, 2016
〔The Japan Times〕Real estate loans extended in Japan in the April to September period rose 14.7 percent from a year earlier to ¥7.07 trillion, hitting a record high for the period for the second straight year, the Bank of Japan said Wednesday.
The increase in the loans extended by 139 major and regional banks and 265 shinkin credit lenders reflected strong demand for funds from real estate-related companies on the back of the central bank's negative interest rate policy.
The BOJ is keeping a close watch to see whether the situation will develop into an overheating of the real estate market.
Bank loans to the real estate sector increased 16.8 percent to ¥5.89 trillion. Loans from shinkin lenders rose 5.4 percent to ¥1.18 trillion.
Loans increased for redevelopment projects in the greater Tokyo area ahead of the 2020 Tokyo Olympics and Paralympics. Also strong was lending to real estate investment funds and individuals planning to build apartments for rent as a tax-saving measure.
The real estate sector, buoyant thanks to property price rises, is among the handful of aggressive borrowers in a country where fund demand for corporate capital spending is lacking in luster.
But concerns have emerged that such increases in loans may cause an asset bubble.
“Aggressive lending is encouraging excessive real estate investments,” said a private credit research company official.
Katsunori Nakanishi, chairman of the Regional Banks Association of Japan, told a news conference that an asset bubble risk will emerge if real estate prices rise too much.
But Nakanishi, also president of Shizuoka Bank, said prices have not yet reached a “cautionary zone.”
In its latest Financial System Report in October, the BOJ said real estate loans are growing not only in major cities but also in rural areas. The central bank also said it needs to check whether real estate transactions at very high prices will spread to rural areas.