On September 20th, the Ministry of Land announced that the average price of residential land in Japan rose 0.1%, the first time in 31 years that residential land prices increased year-0n-year. This is a big milestone in the economy’s long recovery from the bursting of the asset bubble in the early 1990s and also indicates that the country is recovering from the coronavirus pandemic.
Japan’s residential land prices fell year after year following the collapse of the country’s asset-inflated bubble economy over 30 years ago. The rate of decline slowed from 2010 onwards. With the onset of the pandemic in 2020, residential land prices plunged 0.5% in 2021.
However, the big picture is that despite the longterm trend, housing demand has continued to stay strong in the country’s major metropolitan areas, which has helped to lift land prices in urban centers.
This year’s survey covered 21,444 sites across the country and covered commercial, residential and industrial land.
In 2022, residential land prices rose in 14 out of Japan’s 47 prefectures, compared to seven prefectures 2021. Residential land prices fell in 32 prefectures, while average prices stayed flat in Ibaraki prefecture.
In regional areas (those outside the three major metro areas), residential land prices fell 0.2% year-on-year but this was an improvement compared to the rate of decline (0.7% down) in 2021. The difference was due to higher rises in prices in Sapporo, Sendai, Hiroshima and Fukuoka.
Below we dive deeper into the data to see where residential land value rose the most throughout the country.
Hokkaido residential land plots lead price growth
A key takeaway from this year’s survey is that in the nationwide ranking residential land plots ranked by rate of growth in year-on-year land values, all top ten spots were taken by plots in the northern prefecture of Hokkaido.
The top three plots are located in the city of Kita Hiroshima, a suburb of Sapporo.
The fourth, sixth and eighth spots were claimed by plots in the city of Ebetsu, also a suburb of Sapporo.
The fifth and tenth places are in the city of Eniwa. Eniwa lies on the Ishikari plain, about 8-km north of Chitose and 26-km south of Sapporo.
Coming in at seventh place is Ishikari City, located just north of Sapporo, on Ishikari Bay.
Three major metro regions
Nationwide, in 2022 the highest priced residential plot is located in Tokyo’s Akasaka neighborhood in Minato Ward. It is valued at ¥5,040,000 ($35,000 USD) per square meter.
This is very centrally located neighborhood between Tameike-Sanno and Toranomon stations and just north of the Okura Tokyo Hotel.
In western Japan, a plot of land in Kyoto’s Kamigyo Ward chalked up the highest value, at ¥665,000 ($4,601 USD) per square meter.
Nagoya’s Nishiki neighborhood was the frontrunner in the greater Nagoya metropolitan area, with an assessed value of ¥1,400,000 ($9,690 USD) per square meter. This plot also appreciated in value by 16.7% year-on-year, following 13.2% year-on-year growth in 2020.
The Nishiki neighborhood is a centrally located area in Nagoya, about a five-minute train ride from Nagoya Station.
The Nagoya station area is undergoing a major redevelopment in anticipation of the Chuo Shinkansen, a maglev line that will connect Tokyo and Nagoya, with plans for extension to Osaka. The line is expected to connect Tokyo and Nagoya in 40 minutes, and eventually Tokyo and Osaka in 67 minutes, running at a maximum speed of 505 km/h (314 mph). The trip between Tokyo and Nagoya currently takes about one hour and forty minutes via the Tokaido Sanyo shinkansen. The Chuo Shinkansen is scheduled to be completed in 2027.
What cities had highest rate of growth in residential land prices?
The chart below is a ranking of cities by the rate of growth in residential land values. Sapporo led the pack with a double digit growth rate of 11.8%. Fukuoka and Sendai also had high growth rates, supported by redevelopment plans by municipal governments and strong buyer demand.
Source: 2022 Standard Land Price Survey, Ministry of Land (PDF in Japanese)
Photo credit: Nagoya, iStock/bee32
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