Japan is no longer a zero-rate market
The Bank of Japan had set its overnight call rate target at around 0.75% by January 2026 and has continued to review monetary policy during the year. Property financing conditions therefore differ materially from the long zero-rate era.
Higher financing costs compress cash flow
For leveraged investment property, a higher interest rate raises annual debt service and reduces cash flow even when rent is unchanged. This matters especially in expensive central-city markets where initial yields can be low.
Stress-test the investment before purchase
Investors should model repayment amounts, debt-service coverage and net cash flow under higher-rate scenarios. Even cash buyers should consider how tighter financing may affect future buyer demand and resale pricing.