Sales of new condominiums in Tokyo fell 32 percent in the first eight months of 2016 compared to the same period last year, Bloomberg reports, pointing to signs that the real estate boom fueled by Bank of Japan’s easy money policies is starting to unwind.
New apartment sales in and around the Japanese capital slumped to 13,303 units in the January to August period, marking the weakest level since 1992, the report said, citing data from the Real Estate Economic Institute Co.
Potential buyers, faced with almost stagnant wages, are said to be turning down 35-year fixed-interest mortgages as low as 1.06 percent.
“Stagnation in wages is why we are seeing a slowdown in sales of condominiums” in Tokyo, Takashi Ishizawa, a senior researcher at Mizuho Securities, was quoted as saying.
“If you look at interest rates, historically speaking there has never been a better time to buy, but developers without really good properties are having trouble selling.”
Given that the property market boom has been one of the few bright spots for Japan’s economy in recent times, its slump could deepen the deflationary mindset of authorities, Bloomberg noted.
Japanese firms have turned more cautious about raising wages as corporate profits have been hurt as the yen strengthened against the dollar after the BoJ adopted a negative-rates policy in January.
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