Mon, Mar 24 2008, 07:50 GMT
http://www.djnewswires.com/eu
Japan Land Prices Rise In 2007 For 2nd Straight Year
TOKYO (Dow Jones)--Japanese nationwide land prices rose for the second straight year in 2007 on the back of robust real estate investment, but sluggish second half growth due to a slackening in the economy suggests prices may reverse course this year.
Residential land prices grew an average of 1.3% last year, while commercial property climbed an average of 3.8%, the Ministry of Land, Infrastructure, Transport and Tourism said Monday in its annual land price report. It was the first time that average prices in both segments have risen for two years in a row since 1991, when the nation's so-called "bubble economy" burst.
During the first half of 2007, land prices were pushed up due to soaring demand for condominiums and office buildings. The recovery of the broader economy helped boost demand.
In the latter half, however, the pace of growth became sluggish, amid growing uncertainties about the economy and financial markets triggered by the U.S. subprime mortgage crisis, the ministry said. The exact figures for the pace of growth in each half of the year were not calculated by the ministry.
Whereas the reversal of land price trend in 2006 raised hopes that the then-16-year-old trend of real estate deflation could be coming to an end, the recent softening of land prices has caused the government to start fretting about whether it might push the country back to where it was.
"The economy is stalling, which is driving land prices down," a ministry official said. "The possibility cannot be ruled out that land prices will get back on a downward trend and that will weigh on the economy."
"We have to keep an eye on the future course of the economy and interest rates, in addition to a balance between supply and demand of real estate and both domestic and foreign investors' moves," the official added.
The survey also showed the overall rise was led by the three biggest metropolitan areas - Tokyo, Osaka, Nagoya -, as it was in 2006. Their residential land prices rose an average 4.3%, while those in regional areas fell 1.8%. Commercial land prices in the big cities also climbed 10.4%, but those in other areas slid 1.4%.
The ministry's report on land prices per square meter is measured as of Jan. 1 and is compiled annually. It serves as a benchmark for public private land transactions and for government assessment of inheritance and property taxes. The latest report surveyed prices at 29,100 locations nationwide.
TOKYO (Dow Jones)--Japanese nationwide land prices rose for the second straight year in 2007 on the back of robust real estate investment, but sluggish second half growth due to a slackening in the economy suggests prices may reverse course this year.
Residential land prices grew an average of 1.3% last year, while commercial property climbed an average of 3.8%, the Ministry of Land, Infrastructure, Transport and Tourism said Monday in its annual land price report. It was the first time that average prices in both segments have risen for two years in a row since 1991, when the nation's so-called "bubble economy" burst.
During the first half of 2007, land prices were pushed up due to soaring demand for condominiums and office buildings. The recovery of the broader economy helped boost demand.
In the latter half, however, the pace of growth became sluggish, amid growing uncertainties about the economy and financial markets triggered by the U.S. subprime mortgage crisis, the ministry said. The exact figures for the pace of growth in each half of the year were not calculated by the ministry.
Whereas the reversal of land price trend in 2006 raised hopes that the then-16-year-old trend of real estate deflation could be coming to an end, the recent softening of land prices has caused the government to start fretting about whether it might push the country back to where it was.
"The economy is stalling, which is driving land prices down," a ministry official said. "The possibility cannot be ruled out that land prices will get back on a downward trend and that will weigh on the economy."
"We have to keep an eye on the future course of the economy and interest rates, in addition to a balance between supply and demand of real estate and both domestic and foreign investors' moves," the official added.
The survey also showed the overall rise was led by the three biggest metropolitan areas - Tokyo, Osaka, Nagoya -, as it was in 2006. Their residential land prices rose an average 4.3%, while those in regional areas fell 1.8%. Commercial land prices in the big cities also climbed 10.4%, but those in other areas slid 1.4%.
The ministry's report on land prices per square meter is measured as of Jan. 1 and is compiled annually. It serves as a benchmark for public private land transactions and for government assessment of inheritance and property taxes. The latest report surveyed prices at 29,100 locations nationwide.
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