Tokyo Tower is seen in the background in Minato Ward in Tokyo. Photo: AP file
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Japan's average residential land price rises for 1st time in 31 years

35 Comments

The average price of residential land in Japan as of July 1 rose 0.1 percent from the previous year, increasing for the first time in 31 years, as the country's economy recovers from the coronavirus pandemic, government data showed Tuesday.

The average commercial and overall land prices climbed 0.5 percent and 0.3 percent, respectively, both rebounding for the first time in three years, also reflecting growing demand bolstered by low interest rates that have created a favorable lending environment.

"As economic activities normalize, the trend of recovery in land prices has taken place across the country," a government official said, citing price increases in the metropolitan areas of Tokyo and Nagoya, as well as four major regional cities of Sapporo, Sendai, Hiroshima and Fukuoka.

The nation's residential land prices fell consistently after the collapse of the country's asset-inflated bubble economy in the early 1990s. Though the speed of decline gradually eased from 2010, it widened in 2020 with the start of the pandemic, leading to a 0.5 percent drop in the average price the following year.

Despite that trend, housing demand has remained solid in urban centers and areas considered convenient and desirable, helping to lift land prices in such places.

In 2022, 14 out of Japan's 47 prefectures saw their residential land prices rise, compared to seven prefectures in the previous year, while 32 registered drops. The average price in Ibaraki Prefecture, meanwhile, remained flat.

By region, average residential land prices climbed in Japan's largest metropolitan areas of Tokyo, Nagoya and Osaka following a rebound in western areas.

The average price for regional areas fell by 0.2 percent, but the margin of decline was smaller than a 0.7 percent drop seen a year earlier, with the fall cushioned by larger rises in prices in Sapporo, Sendai, Hiroshima and Fukuoka.

The 2022 survey covered the average prices for all types of land including commercial, residential and industrial, based on the value of 21,444 sites across the country, according to the Land, Infrastructure, Transport and Tourism Ministry.

As for average commercial land prices, 18 prefectures saw increases, up from six the previous year, as a pickup in private consumption led to increased demand for stores, while demand for apartments and offices was also firm.

Some tourist spots and shopping districts saw land values increase on the back of increased activity due to eased pandemic restrictions.

The steepest gain in land prices was registered in the industrial area of Kikuyo, Kumamoto Prefecture, in southwestern Japan, where a surge of 31.6 percent was registered after the world's largest contract chipmaker Taiwan Semiconductor Manufacturing Co. decided to build a new plant there.

The largest decline of 8.7 percent was observed in the residential areas of Koriyama, Fukushima Prefecture, after the area was devastated by a typhoon in 2019.

The Meidi-ya Ginza commercial building site in Tokyo's Ginza shopping district fetched the highest price per square meter for the 17th consecutive year of 39.3 million yen.

© KYODO

©2022 GPlusMedia Inc.

35 Comments
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any idea how much of the price increase is being driven by foreign investment?

6 ( +7 / -1 )

"average" doesn't actually mean much

7 ( +8 / -1 )

This how local municipalities manipulate data to collect more property taxes, they say the values has increased but when you try to sell your property you never ever get $ any where near their assessments.

6 ( +8 / -2 )

"average" doesn't actually mean much

No it doesnt, as down here land prices have been rising steadily for about the past 5 years or so.

The property I live on, back around 2000 or so, was roughly 200,000 yen per tsubo, it dropped down to around 175,000 yen per tsubo around 2010-2012, and now sits at roughly 240,000 per tsubo today.

That increase also raised my property taxes as well, and I have another plot of land with roughly 250 tsubo of undeveloped land, that has seen a jump in tax as well.

What makes it rough is that my income has been roughly the same for the entire past 20 to 25 years, and with increasing costs across the board recently, it is getting harder and harder for my wife and I to keep paying those taxes on the properties, and are seriously considering selling the undeveloped one.

Sure we would "make" around 50 Million yen before taxes, but it's the land that we want to keep. I know of plenty of people who are having a hard time with this as well.

7 ( +8 / -1 )

Properties in my area have increased significantly in price. I purchased 3 years ago in central Tokyo. Enjoying paying off my own mortgage instead of my landlords. Once paid off I will rent this out and purchase the next. Housing loans locked at 0.04%.

0 ( +2 / -2 )

Mark

Today 07:34 am JST

This how local municipalities manipulate data to collect more property taxes, they say the values has increased but when you try to sell your property you never ever get $ any where near their assessments

Where do you get this stuff?

Have you actually done it?

I bought my house and land late 2019 an older home under 20 years old.

I paid far above the municipal tax value, today my tax on the house and land hasn't changed but I have already been offered ( solid actual offer) ¥10 million more than I paid.

No point in taking it as we couldn't find a similar place even with the ¥ 10 million more.

5 ( +8 / -3 )

Property in a major town is fine for generating income but for capital appreciation is absolutely dire!

Invest in Japanese real estate to break even if lucky!

-3 ( +2 / -5 )

kurisupisu

Today 08:02 am JST

Property in a major town is fine for generating income but for capital appreciation is absolutely dire!

> Invest in Japanese real estate to break even if lucky!

Isn't that a good thing?

Look at places like Canada where speculative buying has driven the house prices in major cities out of reach for most people.

My reason for buying a house was the fact that I would be paying 40% less per month in mortgage payments than rent and at least if I sell I get something back as opposed to just giving someone else money never seeing anything back.

Even if I only get 50% back it is better than nothing back when renting.

But property investors are the biggest cause of housing crises by causing over priced land and houses and causing rent increases for everyone.

4 ( +7 / -3 )

Low interest rates creates money through debt and receivables. The money created in a not real wealth but as Putin said about the Western prosperity is fake wealth. It is a very delicate balance between creating economic activity through the availability of credit/loan and maintaining the real value of your currency.

-1 ( +1 / -2 )

@Antiquesaving

Actually, I would disagree.

The reason for low prices in Japan has been oversupply and conversely in other countries, a planned lack of supply.

Millions of houses are empty in Japan.

Government and local government policies ensure high population densities in cities and the Japanese mindset (gaman) to live in cramped conditions to gain employment and higher wages.

Remember that Japan is open to foreign buyers too, exactly as the UK, Australia and the US is.

Blaming speculators is only part of the problem…

-3 ( +2 / -5 )

Weak yen and foreign investment inside Japanese shell companies

1 ( +1 / -0 )

This how local municipalities manipulate data to collect more property taxes, they say the values has increased but when you try to sell your property you never ever get $ any where near their assessments.

This is the opposite of how it actually works. The assessed value for tax purposes is less than the actual market value, not more.

1 ( +2 / -1 )

kurisupisu

Today 08:57 am JST

Actually incorrect!

Japan has controls on foreign buying land.

Canada and Australia have no restrictions.

Canada has percentage wise as many empty homes so does Australia, the USA, etc.. and like Japan these places are located where few services or jobs exist.

What is the point of having a house in the mountains of Gunma if no job not doctor, etc.. same in Abitibi Quebec.

Japan, Canada even Australia are having problems with isolated locations and small towns have no hospital not even a doctor.

So the claim there are plenty of house is a bit deceiving.

If I have a house out in an area where it is 30, 40, 60 minutes to a doctor of longer to a hospital I would be dead after my heart attack last year.

This is why these places are emptying out.

No one in Japan, Canada, Australia is land speculating in these out of the way places only in major urban areas!

1 ( +4 / -3 )

Look at places like Canada where speculative buying has driven the house prices in major cities out of reach for most people.

As a Canadian who owns a house in Japan, I basically agree with this. I live in Nagoya, an urban centre with a population bigger than Toronto, yet I could still afford to buy a house here (albeit a small Japanese one) on a middle class income. If I were to try to buy a small house in the suburbs of Toronto, or even a smaller city like Ottawa, I would need an income easily two to three times what I currently earn. Its just insane.

The reason for low prices in Japan has been oversupply and conversely in other countries, a planned lack of supply.

I would partially disagree with this. Most of those empty houses are in rural areas with declining populations. Go to Tokyo, Osaka, Nagoya and other major cities where most people live and you don't have that same problem, empty houses are relatively rare and don't affect the market much.

The thing that contributes most to low prices in Japan is the stupid way houses depreciate in value after you buy them. In North America houses are assets that people invest in and can expect to maintain or increase their value. Here a house is something that you expect to go down in value because the market factors in a big discount for used houses. A 40 year old house in North America, assuming it has been well maintained, is worth about the same as a similar new house. A 40 year old house in Japan, no matter how well maintained, is worth almost nothing (save for whatever the land it is built on is worth).

0 ( +3 / -3 )

I do not believe one figure released by this government

-1 ( +2 / -3 )

rainyday

Today 09:28 am JST

Look at places like Canada where speculative buying has driven the house prices in major cities out of reach for most people.

> As a Canadian who owns a house in Japan, I basically agree with this. I live in Nagoya, an urban centre with a population bigger than Toronto, yet I could still afford to buy a house here (albeit a small Japanese one) on a middle class income. If I were to try to buy a small house in the suburbs of Toronto, or even a smaller city like Ottawa, I would need an income easily two to three times what I currently earn. Its just insane.

It is even worse.

I own a house in Tokyo the house is 115 square metres (1200 square feet) now we think this is small but in reality in cities like Toronto, Montreal nearly 50% live in houses or condos between 90 and 130 square metres the difference is land size, while my house it 115 square metres in 3 floors in Canada it would be one floor.

But interest rates are higher, municipal home owner taxes (property tax. A ¥50 million home in Tokyo ward I live in the property tax is ¥80,000 a year, the same value home in Toronto would be $3,000 CND. (¥320,000).

A house in Toronto or Montreal with 115 square metres in a location equal to my place in Tokyo would cost well over $1 million if not more and I couldn't afford that just the property tax would be ¥600,000 minimum a year.

0 ( +3 / -3 )

From what I understand real estate investment doesn't work in the same way in Japan compared to countries such as Australia US and the UK. The average price of a house in Sydney is 1.6 million AUD. The average price of a house in London is 850000 pounds. It's a wealth builder for many in other countries but it doesn't seem to be in Japan.

1 ( +1 / -0 )

It is even worse.

Yeah, that is all true. Crazy low interest rates, low home prices, low property taxes - Japan has it all. In fact for the first ten years of owning my home my property tax is more than offset by the tax rebate I receive on the home loan.

Its depressing to look at real estate listings back in Canada these days. The other day I did a search for houses in Ottawa out of curiousity. I did a search in the 400k to 600k price range to see what was available, thinking that would be enough to buy a house in the suburbs. Much to my surprise there was almost nothing in that range available (and almost everthing that was was at 599k or so).

And that is for a medium sized city. Do a similar search for real estate in Nagoya, a much bigger city, and about 95% of the houses available fall into that price range or below. And with the lower taxes, interest, etc they become even more affordable still.

At the same time though, Canadian homes really are way better. Perusing the listings there I am reminded of things like finished basements, big yards, garages, walk in closets, kitchens big enough for more than one person to squeeze into them, central air and heating......

All I can do is dream.

0 ( +1 / -1 )

"At present, Japan has no laws that either ban or control the purchase of land by foreign nationals who live in the country, regardless of their visa status. Foreign individuals and entities located outside of Japan also have the right to purchase property."

"That said, without a work visa or permanent resident status, obtaining a loan can be difficult. Foreign buyers typically opt to pay cash for this reason."

Mar 26, 2021

"To address long-running calls for tighter regulations and closer monitoring in cases where foreign firms buy land near Self-Defense Force bases, the Cabinet on Friday approved a bill that would create tougher regulations for such transactions in the hope of alleviating national security concerns."

A nearby friend has a property of residential and commercial. The value of the land is less than the ¥10 million costs of demolition.

1 ( +3 / -2 )

just to compare with Australian house prices, aussies seeing the first downturn in 2 decades.

Prices still sky high by the way.

Some reasons that apply in Australia and not Japan

1/We have immigration at around 200,000 per year not including {long term } temporaries seeking permenant residence. That drives up prices mainly in cities as migrants seek work and countrymen in cities.

2/Retirees from cities move to coastal and regional areas with the gains made from selling at the inflated city prices. That pushes up prices.

3/We had a long term mining boom where average salaries exceeded $200, 000 per year. Lots of people "bought up " in good locations {although mining town prices now at a low ebb}

4/ House loan interest rates where at historic lows for a decade or more. Now interests rates are rising and people crapping themselves.

5/Towns and locations in cities with a certain "cache "saw exponential price gains. At one stage Byron Bay was the most expensive place to buy a house.

And housing was and is a speculative market in Australia, especially cities.

That explains why so many Aussie conversations are about housing and how much you paid .

Pretty boring conversations actually

3 ( +3 / -0 )

3/We had a long term mining boom where average salaries exceeded $200, 000 per year. Lots of people "bought up " in good locations {although mining town prices now at a low ebb}

We had those in Canada for decades, so did Japan.

Do you know what we call them today?

Ghost towns!

0 ( +2 / -2 )

Time to buy in the countryside.

4 ( +4 / -0 )

Housing loans locked at 0.04%.

I think you might have too many zeros there. Under 1% is common, but 0.04% won't even cover the admin fees. If its locked, it won't be for very long.

I have a Covid relief business loan off a government entity that was offered as "interest free", but it's actually 1.21% discounted by 0.9% to 0.31% for three years. Since its a ten year loan, the first three is when most interest would be due anyway.

0 ( +0 / -0 )

Well, in my local area in Kobe I can show you 3-5 houses (empty) in a very desirable area within a minute of my home.

Come to Ashiya where there are US million dollar plus houses abandoned on main roads, 3 minutes to JR main lines!

Nobody can afford them!

Undeveloped Amagasaki where factories are abandoned and nobody intrudes.-5 minutes to Osaka.

Foreigners can buy homes here ( no barriers except some taxes that residents and Japanese do not pay) and many do through real estate agent tie-ups without leaving their own countries of residence.

And comparing the US,Canada,Australia with Japan is slightly off base.

Try the UK where house prices have rocketed in the last 25 years vs Japan where they haven’t.

-2 ( +0 / -2 )

Paper tigers and theories only. The real market prices are made in the real buying and selling contracts or procedures. It’s the same with all those daily share or currency prices, you are not getting richer or poorer while holding those positions, only in the moment of buying or selling the changes take effect.

-1 ( +0 / -1 )

The average price of residential land in Japan as of July 1 rose 0.1 percent from the previous year, increasing for the first time in 31 years

This is one example of a stat where we need to see the standard deviation. There will be Tokyo, certain Tokyo surroundings, and Okinawa where land is going up, and lots of places where it's going down. In others, it may have simply fallen so far already that it cannot fall any more.

0 ( +0 / -0 )

Here is another difference that keeps housing prices lower in Japan.

When I was looking for a place I found a nice plot of land in the area I most wanted just the land ¥30 million.

But a mortgage loan was only for the land and to build a house they will not give a mortgage loan.

A used house is the same they will not give extra to do renovations for that you need to get a "sumairu loan" at far higher interest rates and short time.

I North America you can negotiate a home load mortgage to include renovations or building a new home.

1 ( +1 / -0 )

0.1%? Not much change there?

-1 ( +0 / -1 )

I think you might have too many zeros there. Under 1% is common, but 0.04% won't even cover the admin fees. 

You are correct, it's 0.4%, locked, mistyped.

0 ( +0 / -0 )

The thing that contributes most to low prices in Japan is the stupid way houses depreciate in value after you buy them.

One reason why the value of dwellings depreciates so rapidly is the unforgiving climatic conditions. High humidity and cyclonic downpours play havoc. After thirty years of exposure to the elements, a place is worth a small fraction of what you originally paid for it. If you’re lucky, the land will hold up or even improve in value without you having to do anything. But, like others have said, property investment in Japan is no sure fire way to riches.

1 ( +1 / -0 )

In other countries real estates homes appreciates but in Japan they depreciate not a good investment!!

1 ( +1 / -0 )

Property in a major town is fine for generating income but for capital appreciation is absolutely dire!

Invest in Japanese real estate to break even if lucky!

The same excuse of the conformist one who doesn't have money to buy a house..

0 ( +0 / -0 )

Chinese and foreign money.

-1 ( +0 / -1 )

I’m fine either way. I own 3 rental properties in Tokyo and have been raising the rent 1.75% every year for the last 12 years - but only to foreign renters. For Japanese, I offer a discount.

-1 ( +0 / -1 )

The same excuse of the conformist one who doesn't have money to buy a house..

Been there, done that and sold up!

Not in Japan though and I never will…

0 ( +0 / -0 )

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