BOJ Sees Signs of Overheating in Real Estate Loans

Economy Politics

Tokyo, April 17 (Jiji Press)--Real estate financing by Japanese commercial banks is showing signs of overheating for the first time since 1990, the Bank of Japan said in a semiannual report released Wednesday.

The central bank underlined the need to monitor the situation closely, while saying in the Financial System Report that Japan's real estate market "cannot, as a whole, be judged to be experiencing overheating driven by overly optimistic growth expectations, as in the bubble period."

The report said that the indicator calculated by dividing the amount of outstanding loans to the real estate industry by the country's nominal gross domestic product topped the upper limit of stable activities for the first time in about 28 years in the second half of 2018.

The amount of fresh real estate loans started declining after financial authorities strengthened their surveillance in the wake of lending irregularities at Suruga Bank <8358>, a regional lender in the central Japan prefecture of Shizuoka.

But the balance of financing for rental housing businesses has remained high as loans for the industry are usually extended over a long period.

[Copyright The Jiji Press, Ltd.]

Jiji Press