Japan land prices rebound a year after pandemic broke six-year uptrend

The average price of land in Japan has rebounded on solid housing demand, after falling the previous year for the first time in six years due to the impact of the coronavirus pandemic, the government said Tuesday.

The price of land in all categories nationwide, including that designated for residential and commercial use, rose 0.6% from a year earlier as of Jan. 1, according to the Ministry of Land, Infrastructure, Transport and Tourism.

The ministry said it had observed a recovery trend, driven by housing demand in urban areas and vicinities, as the influence of the pandemic is waning. The survey examined 26,000 locations across the country before the so-called “sixth wave” of COVID-19 infections hit Japan.

The price of residential land rose 0.5% on average and that of commercial land increased by 0.4%.

In Tokyo, prices for residential and commercial land rebounded with increases of 1.0% and 0.6%, respectively, as housing demand expanded with people reviewing their residential environment amid the spread of telework.

Prices for residential and commercial land also rose in three prefectures adjacent to Tokyo — Saitama, Chiba and Kanagawa.

Despite the positive results, land experts pointed out that prices from now would be affected by impacts on the world economy and financial markets of Russia’s military aggression against Ukraine, in addition to the COVID-19 situation.

“For example, if prices of crude oil and wheat remain high for a long period and trigger a significant price hike in daily necessities, it will dampen people’s appetite to purchase homes and spend money in commercial districts,” said Takeshi Ide, a senior researcher at real estate research firm Tokyo Kantei Co., referring to concerns over the Ukraine crisis.

Of Japan’s 47 prefectures, 26 saw a decline in all-category land prices against a backdrop of a shrinking population and a drop in tourists, although the margin of decline narrowed, according to the ministry.

The prices of residential land in areas including Tokyo, Osaka and Nagoya, the three largest metropolitan areas, rose 0.5% due to solid demand fueled by improved economic sentiment and low interest rates.

The share of locations with increased prices climbed to 43%, up 24 percentage points from a year earlier, amid the spread of telework during the pandemic.

But in 27 prefectures the prices of residential land fell, while the rate of decline shrank by 0.5 point from a year earlier to 0.1% in areas outside the three largest metropolitan areas but excluding Sapporo, Sendai, Hiroshima and Fukuoka.

For commercial land, prices went up 0.7% in the three metropolitan areas and 0.2% outside those areas, according to the data.

A plunge in inbound tourism and decreased dining out due to the pandemic have led to falling land prices at nightlife districts such as Tokyo’s Ginza, Kanazawa’s Katamachi and Hiroshima’s Nagarekawa, as well as popular tourist spots like Takayama in Gifu Prefecture. The steepest fall, of 15.5%, was logged in Osaka’s Dotombori district.

By location, Kitahiroshima in Hokkaido ranked first in price rises for both residential and commercial land, recording a 26.0% increase in residential land prices.

Among the top 100 locations ranked according to the rate of price increases for residential land, 96 were located in Hokkaido.

Prices for industrial land rose 2.0% across the country on average, on the back of solid demand for logistic sites amid an expansion of online shopping, the data showed.

The main store of Yamano Music Co. in Tokyo’s Ginza shopping district recorded the highest land price among surveyed locations across Japan for the 16th consecutive year, at ¥53 million per square meter.