Source : Business Times – 1 July 2009
* Property prices drop in both big cities, rural areas
* Bleak economic conditions weigh on real estate market
Land prices in Japan fell 5.5 per cent in 2008, marking the first decline in four years, a government survey showed on Wednesday, as the global financial crisis dealt a blow to the Japanese real estate market.
Japan’s deepest recession since World War Two sapped demand for housing and office buildings, and tighter credit conditions dampened property investment, weighing on land prices which had been stabilising after more than a decade of declines.
Land prices fell in all of Japan’s 47 prefectures last year, according to the survey by the National Tax Agency, which covered about 370,000 building lots.
Property prices in Tokyo and its neighbouring prefectures fell 6.5 per cent, after a 14.7 per cent rise the previous year.
In the Osaka vicinity in western Japan, land prices declined 3.4 per cent, while those in the central Japan city of Nagoya and its neighbouring areas tumbled 6.3 per cent.
Average land prices in rural areas, which had been flat in the previous two years, dropped 3.8 per cent last year.
Japan’s land prices had slumped since the early 1990s after the bursting of an asset bubble, leaving huge piles of bad loans in the banking sector and crippling the economy for a decade.
The OECD said last week that a further drop in Japan’s land prices is likely in 2009, creating a risk of balance-sheet adjustments that would put additional pressure on the corporate and financial sectors.
The tax agency assesses land prices as of Jan 1 every year to calculate inheritance and gift taxes.
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