Despite years of unprecedented government action it appears as though deflation is regaining its long standing grip on the Japanese economy. Land prices fell for the first time in 3 years.
TOKYO (Nikkei)–The nationwide average of official land prices as of Jan. 1 declined 3.5% on the year to mark the first fall in three years, the government said Monday.
According to data released by the Land Ministry, land prices fell in all 47 prefectures. Prices had risen sharply in central Tokyo and Nagoya for several years through January 2008 but slid more than 10% in the latest survey.
The declines reflect growing reluctance to purchase properties due to a combination of the economic downturn and reduced flow of investment funds amid the financial crisis.
Nationwide land prices started falling in 1992, immediately after the collapse of a property bubble and continued sliding until 2007. They rose 1.7% last year.
Residential land prices fell an average of 3.2% on the year as of Jan. 1, while commercial land prices tumbled 4.7%. Prices rose in only 23 of the roughly 28,000 reference sites nationwide for which year-on-year comparisons were possible. This was the lowest number since the survey began in 1970.
Declines were especially pronounced in the centers of major cities. Commercial property prices jumped 22.1% in Tokyo’s Minato Ward last year but slumped 13.1% this year. Residential land prices in central Tokyo fell by more than 10%.
Residential land prices fell an average of 3.5% in the nation’s three major metropolitan areas of Tokyo, Osaka and Nagoya, while commercial property prices slid an average of 5.4%. Both exceeded their respective nationwide averages.
“The property market is depressed by a number of factors, including the economic downturn, the credit crunch and falling office rents,” a ministry official said. “There are very few, if any, factors that can boost land prices.”
The greatest concerns in the U.S. recovery might not be here in out own country, but might actually be in the numerous nations whose recoveries are going to so severely lag our own….