Stock Prices Are Plummeting

As of April 9, when this article is being written, the Nikkei Index is hovering around 32,000 yen.

On April 7, it temporarily fell below 31,000 yen, hitting its lowest level since October 2023. Among those who started investing in stocks during the recent All Country (Orukan) boom a few years ago, many are likely feeling not only financial losses but also significant anxiety about investing in general. Unlike real estate investments, stock investments visibly show a decline in asset value through numbers, which can cause considerable psychological stress.
※ “Orukan” is a nickname for eMAXIS Slim All Country Equity Fund, a mutual fund that allows diversified investment in global stocks.

Now, does a drop in stock prices necessarily mean that real estate prices will fall too? Not necessarily. While both stock and real estate prices can fall simultaneously when economic recession or monetary tightening factors coincide, some people actually see real estate—a tangible asset—as more trustworthy during times of stock market instability.

The biggest difference between stocks and real estate is whether they can become worthless. While natural disasters could potentially wipe out real estate assets, in general, even if buildings deteriorate, the land itself remains. Real estate doesn’t “melt away” like stocks, which depend on company performance and continued existence. Moreover, with real estate, rental income doesn’t drop to zero due to economic conditions or interest rate changes, making it a lower-risk asset in terms of sudden collapse.

Additionally, Japan’s structural background cannot be overlooked. As a country poor in natural resources and facing a declining working population, it’s reasonable to expect Japan to move toward inflation in the future. Inflation means a decrease in the value of money, which in turn implies that the relative value of real assets rises. In other words, tangible assets like real estate tend to maintain or even increase their value during inflationary periods.

Given this, real estate can be positioned as an asset likely to retain solid value going forward. Of course, this doesn’t apply to all properties. In fact, this trend will likely be limited to central urban areas. In areas within the city center where supply and demand are balanced, prices are expected to remain stable.

If stock prices continue to decline and cool consumer sentiment across the market, it could present a “buying opportunity” for investors. Rather than being swayed by temporary fluctuations, now is the time to reassess one’s asset composition and re-evaluate personal investment positions from a long-term perspective.

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