On Mar. 18 the land ministry released its latest list of property values throughout Japan. For at least two years running land prices, both for residential areas and commercial areas, have been dropping nationwide. Of the approximately 27,000 localities checked only 7 recorded any increase in land values. Though the government says the economy continues to show signs of recovery, property values remain stagnant, which means the economy can never recover fully.
The average price decrease for residential areas was 4.2 percent. The drop in the same period a year ago was 3.2 percent. Similarly, the drop for commercial land was 6.1 percent compared to 4.7 percent a year earlier. The drop for commercial land was even steeper in the three metropolitan areas of Tokyo, Osaka, and Nagoya: about 7.1 percent. This greater drop was blamed on a mini-bubble for commercial property in some areas of Tokyo in 2006.
Because the statistics are averaged, it tends to cover up the fact that well-to-do people are still buying property at high prices. Last week, for instance, a family-style condominium located close to Itabashi station in Tokyo sold out its entire offering of 325 units in less than a day even though the price of most units was around ¥55 million. The buyers, it was reported, all work for stable, “elite” companies and since the condo was only two minutes from the station, it was considered a “bargain” even though an average family could never afford that price.
More significantly, one of the areas that saw an increase in land values was a community in Mishima, Shizuoka Prefecture, which is 45 minutes from Tokyo by Shinkansen. About 3,000 people have moved into the area in the past year alone, 10 percent of them from Tokyo and neighboring Kanagawa Prefecture. Fifty years ago the population of the district was 15,000. It’s now about 40,000, and local developers can’t catch up with the demand for land and housing. Why? Mainly, it’s because the local government has promised free medical insurance for all children up until they graduate from high school. Consequently, the two elementary schools in the districts each added two new classes this spring. The district also has invested in public day care facilities. These services do not come with higher property taxes but are subsidized by a larger tax base thanks to companies moving in to take advantage of the district’s plentiful ground water supply. It’s food for thought.
The MLIT statistics are quite revealing, aren’t they? I noticed that outside the three metropolises, the rate of residential land price decline was biggest in Amakusa in Kumamoto (two places), followed by Sapporo (six places) and Rumoi (two places), while for commercial land, Rumoi took top spot, with a 21.7% decline. The Rumoi subprefecture is clearly in real trouble, even by Hokkaidp standards of imperilment.
Fine blog, BTW, Philip, as is your criminally underpublicized Yen for Living blog at the Japan Times online. Please stop by mine if you have a second: