- TOKYO - Senior manager Kanji
Ito bought his modest two-bedroom Tokyo apartment for 100 million yen (S$1.4
million) in the 1980s.
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- Last year, it was valued at a mere 50 million yen. His
loss from asset deflation is mirrored by home buyers who bought properties
before 1990.
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- According to a White Paper on the economy released by
economic czar Heizo Takenaka this week, such losses, including those sustained
by companies, have amounted to 1.16 quadrillion yen (S$17 trillion) since
the burst of the 1990 bubble.
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- The amount is twice the size of the country's gross domestic
product.
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- For people like Mr Ito, it has meant paying a higher
monthly amount as banks reconfigure their loans to take in the lower value
of the properties.
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- Some even had to take out a second mortgage when banks
required them to top-up their loans.
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- The situation is made worse as it comes at a time of
declining income.
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- 'I used about 10 per cent of my salary to service the
loan in the past but now it takes up more than 20 per cent of my income,'
said Mr Ito, 52, who still has more than 10 years on the loan to go.
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- Loan repayments in Japan are usually structured around
large payments during summer and winter bonus time.
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- Borrowers hit with declining bonuses have had to squirrel
away more money during other months to make good on the repayment schedule.
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- It is estimated that the hardest hit are those of Mr
Ito's generation, several millions of whom were in their late 20s and 30s
when they bought their first home during the 80s.
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- At least four million such borrowers are burdened by
their home investments, a statistic not too well reflected after the sums
are averaged out following the collection of data.
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- Such households would have less to spend on other consumer
items such as transport, food and education, even though their overall
expenditure, as a proportion of their income, has increased.
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- In fact, some analysts have commented that in these hard
economic times, consumer spending is surprisingly strong when considered
as a proportion of their income.
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- 'The spending and savings rates have remained relatively
constant in Japan,' noted Nomura Research Institute's Mr Richard Koo.
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- 'It is difficult to expect lifelong savings habits to
change overnight.'
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- The Ministry of Public Management, Home Affairs, Posts
and Telecommunications released statistics on Wednesday indicating a 5.4-per-cent
rise in household spending for the month of September, averaging 296,109
yen.
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- This was the largest rise since March 1997 when consumers
bought ahead of a consumption tax increase.
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- It is also the fourth month of increase after a five-year
downward trend.
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- According to the data, households spend more on housing
and facility maintenance each month, the third largest expenditure after
food, and transport and telecommunication.
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- http://straitstimes.asia1.com.sg/asia/story/0,4386,153807,00.html?
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