BoJ frets over real es­tate lend­ing boom

The Sun (Malaysia) - - SUNBIZ -

TOKYO: The Bank of Ja­pan (BoJ) said yes­ter­day it is closely mon­i­tor­ing bank lend­ing to the real es­tate sec­tor to guard against ex­ces­sive credit that could lead to over­heat­ing and pose risks to fi­nan­cial sta­bil­ity.

The BoJ does not cur­rently see signs of a prop­erty bub­ble, ac­cord­ing to a re­port it re­leased yes­ter­day.

How­ever, the cen­tral bank is con­cerned be­cause the ra­tio of real es­tate in­vest­ment to nom­i­nal gross do­mes­tic prod­uct is un­com­fort­ably high and banks are ex­tremely will­ing to ex­tend loans to prop­erty de­vel­op­ers.

The BoJ also ex­pressed con­cern about fall­ing yields on of­fice build­ings in ma­jor cities, which sug­gests that in­vestors have driven prices too high, the re­port showed.

De­spite Ja­pan strug­gling with low growth and de­pressed do­mes­tic con­sump­tion, prop­erty de­vel­op­ment has stood out, be­ing one of the big­gest ben­e­fi­cia­ries of the in­creased lend­ing, set­ting of a wave of res­i­den­tial and of­fice de­vel­op­ment in Ja­pan’s largest cities.

The BoJ said com­mer­cial banks’ cap­i­tal ad­e­quacy ra­tios are high enough to with­stand fi­nan­cial shocks, ac­cord­ing to the re­port. – Reuters

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