Once the peak of a cycle is japan property agency being approached, real estate prices become increasingly cut off from their “fundamental values” and vulnerable compared to exogenous shocks. The shock can be an unanticipated change in the overall economic performance. This event damages market confidence and causes a capital flight away from the relevant assets. When real estate prices are so high that buyers do not want to buy anymore at this price level, and of course, sellers are not able to sell at his level, there will be market correction – a bubble crashes. The price collapse can be affected substantially by forced sales of properties. The difficulties experienced by borrowers are japan property agency transmitted to banks. The bad loans of banks and capital adequacy problems may lead to tightening of lending standards and credit rationing.The next situation was common in Japan at the end of 80’s: Land is the main problem in the non-performing loans held by the Japanese financial institutions. During the period of the bubble economy, banks competed with one another in offering a large amount of loans and accepting the pieces of land as collateral. The combination of low interest rate and abundant liquidity activated real estate investments and affected most sharply on the inelastic urban land supply to generate japan property agency accelerating in increase of land prices. Increases in the market value of land (land as asset) held by corporations mean a rise in the value of this asset on their balance sheet.There have been two links between increases in land values and banks’ credit in the Japanese financial environmental. First, banks gave land-related loans directly to real estate companies or indirectly trough loans to subsidiary companies that are the main loan channels to real estate companies in Japan. Such lending policies rose very sharply and accelerated joint land and equities asset prices. Secondly, banks in Japan have traditionally relied on collateral rather than project quality and cash flows. The japan property agency soaring value of land provided the collateral against which Japanese firms could borrow at home to buy assets abroad.After the collapse of the bubble economy, however, those pieces of land could not be disposed of in order to reconstruct loans because the prices of the land fell significantly and banks have been obliged to retain the pieces of land with depreciated values. Liquidity was cut back because of restriction policies and the discount rate was raised five times from 2.5 percent to 6.0 percent by the end of 1990. The so-called bad-loan disposal, which is expected to continue for the next several years, is actually nothing, but a higher level of the reserve fund covering the losses of loans.The reserve fund for loan losses is a fund prepared to cover the losses caused by default of borrowers and it gives favourable tax treatment for such funds. Non-performing loans have not been worked out directly, but japan property agency reserve funds were raised. This means that the indirect “disposal” of bad loans is officially approved for taxation purposes and the disposal method used for the past several years has simply built reserve funds. In other words, non-performing loans are still recorded on the financial institution’s balance sheets and therefore the amount of japan property agency bank loans has not been reduced. The real estate market is depressed with the illiquid lands kept idle by banks without being traded in the secondary market.
http://www.daikyo.com.hk/en/buy/mansion/z?featureArea=true