Property Lending by Japanese Banks Hit a Record in 2018

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Property Lending by Japanese Banks Hit a Record in 2018

Last year, the Bank of Japan started feeling anxious when property lending by Japanese banks hit a record high. Real estate financing from domestic banks was 78.94 trillion yen ($712 billion) by the end of 2018. This number marked the fourth consecutive increase by year and the highest on record, according to the Bank of Japan. With property demand skyrocketing, the bank is worried about an overheating market.

Why Is Japan’s Real Estate Market Exploding?

As lenders look for more profitable investments, the Bank of Japan’s easy monetary policy is funneling financing into real estate. With that cash flow, combined with a labor shortage and rising resource prices, Tokyo property prices are increasing. Hence, policymakers are on red alert. They’ve seen this behavior in the past, and it did not end well following Japan’s asset bubble in the late 1980s.

It Could Be a Healthy Market for Japan

Although the Bank of Japan is feeling the pressure about a possible asset bubble burst, the market still might remain stable. According to a senior BOJ official, even if the indicator does exhibit signs of overheating, “it doesn’t necessarily mean there’s a bubble,” as determining a bubble “requires a comprehensive assessment of various factors.” Hence, not everyone in real estate and banking shares the anxiety. Sure, prices are rising in Tokyo and other urban areas, but on the whole, they are below that of the previous bubble era.

Propy Makes History in Flourishing Japanese Market

Propy experienced this rising Japanese market firsthand in a recent deal. After successful completion of two real estate deals in Japan, Propy became the first to record such transactions on a blockchain in the Asia-Pacific region. As the market heats up, investors are looking for more streamlined avenues to buy properties and save money on fees from brokerages. These streamlined avenues simplify the transaction process and require less work from intermediaries. Hence, the real estate transaction process is much more efficient, and securing property rights are done in a way that the traditional process could never produce.