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Evaluation of the Expansion of Housing Credit in Japan

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  • Charles Yuji Horioka
  • Yoko Niimi

Abstract

. In this paper, we show that there was a rapid expansion of housing credit in Japan after 1970 and then consider what benefits and costs the rapid expansion of housing credit conferred on Japanese households and whether it was, on balance, a good thing or a bad thing for them. On the one hand, the rapid expansion of housing credit made it easier for households to purchase housing, which in turn enabled them to purchase housing at a younger age and enabled them to avoid the need to pay rent. On the other hand, the rapid expansion of housing credit increased the housing loan repayment burden of households, which in turn forced them to cut back on non-housing consumption and weakened their ability to accumulate financial assets in preparation for retirement. We conclude that, until now, the benefits of the expansion of housing credit seems to have outweighed the costs thereof, as a result of which it has increased the welfare of households but that there are some areas of concern and that the government should take the necessary steps to alleviate these concerns.

Suggested Citation

  • Charles Yuji Horioka & Yoko Niimi, 2020. "Evaluation of the Expansion of Housing Credit in Japan," ISER Discussion Paper 1098, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:1098
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    File URL: https://www.iser.osaka-u.ac.jp/library/dp/2020/DP1098.pdf
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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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