Japan » Market Report

The land prices are starting to stabilise in areas besides Tokyo, where some fashionable, centrally located neighbourhoods have seen prices rises in recent years. Land prices in some parts of Osaka, the biggest city in western Japan, rose for the first time in more than 10 years, as did prices for parts of the commercial-property market in Kyoto, another large city.

Overall, prices of residential properties in rural areas fell by 5.4%, the first time in eight years that the rate of decline slowed from the previous year. (In 2003, such prices fell 5.7%). The decline in rural commercial land prices slowed for the first time in seven years, with prices dropping 7.5% last year, compared with an 8.7% decline in 2003.

The high population density in urban areas, along with the fact that 66% of Japan is forested and/or mountainous with little potential for housing, has pushed up the price of land suitable for housing. Land prices in Japan skyrocketed from the latter half of the 1980's, reaching a peak in around 1991 and then tumbled down in line with the burst of the asset-inflated economic bubble. According to statistics at the beginning of 2003, the price of residential land had fallen 5.6% in Tokyo, 8.7% in Osaka, and 5.7% in Nagoya, compared with the previous year.

Average land prices for residential areas nationwide were down 39.7%, while those for commercial areas were 65% lower. The price of certain areas of prime land in central Tokyo, however, had started to rise again. International Property Brokers forecast that the housing market is showing signs of bottoming out, but it won't overnight turn into a raging bull market, but take several years to build a base.

According to International property brokers Japan’s property market seems to have slowed down. Small number of people mostly foreigners would turn to Japanese real estate market. There is no market for old homes as they are not considered very durable, mostly they last for 30 years only. Government has introduced incentives but the picture is not very promising. Despite stronger GDP in first half of 2008 Japan’s economic outlook is weak.