Japan Real Estate Shares Slump Most Since 2020 on Rates Concern

By Toshiro Hasegawa

July 31, 2024 at 9:09PM EDT

Residential buildings in the Toyosu area in Tokyo, Japan, on Saturday, Feb. 11, 2023. Tokyo's condo market is showing early signs of cooling after policy tweaks by the Bank of Japan spurred speculation that mortgage burdens may rise, prompting some homebuyers to think twice before purchasing. Photographer: Kosuke Okahara/Bloomberg (Kosuke Okahara/Bloomberg)

(Bloomberg) -- Japan’s real estate shares tumbled the most since March 2020 on concern mortgage rates will increase and sap demand after the nation’s central bank raised its benchmark interest rate.

A gauge of real estate stocks on the Topix index sank as much as 6.4%, the worst performing sector in the broader index. Japan’s biggest property companies Mitsui Fudosan Co. and Mitsubishi Estate Co. dropped at least 7%, while Sumitomo Realty & Development Co. retreated as much as 9.4%.

The Bank of Japan hiked its policy rate to around 0.25% from a range of 0 to 0.1% on Wednesday, prompting the nation’s largest lender Mitsubishi UFJ Financial Group Inc. to increase its short-term prime rate, which is seen as a benchmark for floating-rate mortgages and other loans.