Loans for rental housing increased by 20% this quarter

The total value of loans offered by banks for real estate purchases in the second quarter of fiscal 2017 (July ~ September) was 2.96 trillion Yen (approx. 26 billion USD), an increase of 23.5% from the previous quarter.

Demand for financing for the construction of commercial office and apartment buildings has been high due to the historically low interest rate environment.

Apaato-loans (loans issued to landowners for the construction of cheap rental housing) reached 859.1 billion Yen this quarter, an increase of 19.6% from the previous quarter.

Apaato-loans for the first half of 2017, however, decreased by 17.8% from last year to 1.577 trillion Yen (approx. 14 billion USD). In the past few years, demand for this type of loan product has skyrocketed due to changes in inheritance tax laws that have made it more effective to have rental housing on idle land. A surge in construction of cheap rental housing is leading to a market oversupply. As a result, landlords and potential investors may be starting to find that these properties are no longer as profitable as they once were.

Sources:
Jiji Press, November 22, 2017.
SankeiBiz, November 17, 2017.

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