From Negative Interest Rates to Rate Hikes, Are Japanese Home Prices Turning the Corner?

The yen has been a hot topic over the past year as it has continued to depreciate, but it seems to be showing signs of a reversal in the last month. With the dollar's interest rate hike window approaching, theThe yen is beginning to show a counterattack.Since July, the yen has appreciated by more than 5% against the dollar.

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Japan raises rates, yen appreciates

On Wednesday, July 31, the Bank of Japan announced its latest interest rate resolution, announcing that theRaise interest rates by 15 basis points, raising the policy rate to0.15%-0.25%, the Bank of Japan voted 7-2 to approve the interest rate resolution, after the market expected to remain unchanged.

Meanwhile, the Bank of Japan announced its tapering program, with the size of treasury bond purchasesReduction of 400 billion yen per quarter, will no longer provide a bond purchase range but rather a specified amount.

Following the monetary policy meeting, Bank of Japan Governor Kazuo Ueda said at a press conference that 0.5% is not considered a specific interest rate ceiling, theIf the current economic and price outlook materializes, interest rates will continue to rise and the intensity of easing will be adjusted.

After the publication of the resolution.The yen continues to rise against the dollar.It has now broken through the round number 150:

The market expects that after the rate hikeJapan's short-term rates to rise back to around 0.3%, at a high level since the international financial crisis of 2008.
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Are Japanese house prices about to turn the corner?

Against the backdrop of the yen's interest rate hike and appreciation, whether or not Japanese home prices will see a turnaround has become the focus of attention in all walks of life.

1️⃣ Bank of Japan raises interest rates, lending rates rise

In terms of the direct impact of the rate hike on house prices, theInterest rate hikes usually lead to higher lending rates, theThis in turn increases the burden on home buyers and puts some pressure on house prices.

However, in Japan, about 75% of personal mortgages are variable-rate loans, tied to short-term prime rates set individually by banks.

This means thatAs the Bank of Japan raises interest rates, banks are likely to raise their short-term prime rates, which in turn will affect mortgage rates.

Banks such as Mitsubishi UFJ Financial Group have already said they will raise their short-term prime rates, signaling a future rise in Japanese mortgage rates.

However, it is important to note that the rise in Japanese mortgage ratesIt doesn't necessarily lead to a significant drop in home prices immediately.

On the one hand, most Japanese banks have a rule that monthly mortgage repayments can only be adjusted once every five years, so in the short term monthly repayments are likely to remain unchanged, easing the immediate pressure on homebuyers.

On the other hand, the steady growth of the Japanese economy and rising wages are expected to offset to some extent the impact of rising interest rates on the burden of home buyers.

2️⃣ Yen appreciation has limited impact on Japanese properties

The appreciation of the yen may also have a complex impact on Japanese house prices.

On the one hand, the appreciation of the yen has made imports cheaper, which has helped to reduce inflationary pressures, thus possiblyReducing pressure on the central bank to raise interest rates furtherThe

On the other hand, the appreciation of the yen may reduce foreign investors' interest in Japanese real estate, which will become more expensive when denominated in other currencies.

However.which may have a relatively limited impact.This is because the main demand for Japan's real estate market continues to come from within the country.

3️⃣ Continued population inflow in Tokyo, Osaka

Recently, Japan's Ministry of Internal Affairs and Communications released the results of its latest demographic dynamics survey, showing that Japan has been highly sought after by global talent in recent years.The number of foreigners in Japan is at a record high.

According to the data, the number of foreigners in Japan increased by 329,535 compared with the previous year, totaling 3,323,374 and surpassing the 3 million mark for the first time.

the continuing influx of people from Tokyo and Osaka.provides solid support for the real estate market as well.

Whether or not Japanese home prices will see a turnaround will need to be judged based on the actual market reaction and further observation of the data.

Japan's interest rate hike and the yen's appreciation can be seenThe long-term trend of yen appreciation is basically established.So now is the time to buyPrime time for Japanese real estateIn the future, Japan's housing prices will only increase.

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