Real Estate News

September 8 2015

Abenomics and Property Asset Value

Real Estate Values Surge Under Abenomics

Real Estate Values Surge Under Abenomics

Abenomics has made an impact on the real-estate market.

Under its “three arrows” – (1) a robust and flexible fiscal policy, (2) dramatic monetary easing and (3) policies for growth to spur private investments – Abenomics seeks to break away from deflation and bring about economic growth.

With the stock market performance under Abenomics, price values of 3 major cities (including Tokyo) are on the rise for the first time in 5 years (July 2013 Prefecture Land Value Research). Condominium sales are going well. A mega condominium in the city of Yokahama recently received 800 inquiries, twice the number expected. Both the upper and middle classes are expressing their desire to purchase real estate. It is no wonder that foreign investors have also taken interest, saying “Japan is the most attractive market today”.

When considered alongside the depreciated yen may be considered even more attractive.

Will this trend last?

Under Abenomics, the real estate market will continue to grow. In addition, a targeted 2% inflation should increase property values while triggering a “hidden mechanism”: At 2% inflation, Japan’s overall monitory value will decrease, along with the value of its savings. To prevent potential loss, people will naturally look to owning more tangible assets.

If 2% inflation is met, monitory value will go down so the saving value will decrease. In order to stop the potential loss, people will try to get a hold of tangible assets.

These tangible assets are gold and real estate.

As the demand for tangible assets grows, prices will increase – and, as a result, property values will increase as well.


Active real-estate trade

Evidence of Abenomics effect can be seen everywhere. In a Condominium Awareness Survey of the Tokyo Metropolitan area, more than 40% responded that they feel condominium prices are slowly rising. We are now at a time where sellers are starting to cash out at a high price, making it difficult for new buyers.

Sellers too should take a deep look at the trend and make smart decisions.

[Related Links] [ September 23 2015 ] Growth in Japanese Property Investments [ July 28 2015 ] 2020 - Tokyo is growing -

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