Average land prices fell in both commercial and residential areas as of Jan. 1 for the first time in three years amid the deepening recession, with 97 percent of around 24,000 locations showing price declines, the government said Monday.
The nationwide average of commercial land prices posted a year-on-year drop of 4.7 percent, while residential land prices fell an average of 3.2 percent, the Land, Infrastructure, Transport and Tourism Ministry said.
The global recession, exacerbated by the collapse of Lehman Brothers Holdings Inc. in September, dragged down land prices in major cities, ending an upward trend.
With declining investment in the real estate market, particularly in major cities, due to the global financial crisis, land prices are likely to stay in the doldrums for some time amid increased office vacancy rates and persistently weak demand for condos, analysts said.
The real estate market has worsened in the first three months of this year following major land price falls in the last quarter of 2008, said Makoto Noda, chief real estate consultant at Mitsubishi UFJ Trust and Banking Corp.
Land prices rose in only 21 of the 24,000 reference points, none in the nation’s three biggest urban areas centering on Tokyo, Nagoya and Osaka.
In the three main urban areas, the average price of commercial land fell by 5.4 percent, down for the first time in four years, while the average price of residential land dropped 3.5 percent for the first decline in three years.
The average price of commercial land in the heart of Tokyo fell 8.8 percent, in stark contrast with a rise of 20.4 percent the year before.
Commercial land prices in the cities of Sendai, Nagoya and Fukuoka plunged more than 20 percentage points after rising a year earlier.
The average prices of commercial property in rural regions declined 4.2 percent, while rural residential land fell 2.8 percent.
The sharpest commercial land price fall — 28.4 percent — was registered for a location in Naka Ward, Nagoya, while the largest drop in residential land — 18.3 percent — was recorded for a plot in Shibuya Ward, Tokyo.
The priciest point was in the Ginza shopping district in Chuo Ward, Tokyo, at ¥38.2 million per sq. meter.
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