2019年4月4日 星期四

Official land price increased in four consecutive years - local residential area also went up

Recently the Nihon Keizai Shimbun Electronic Edition reported the following:
公示地価、4年連続上昇 地方の住宅地もプラス
2019/3/19 16:50日本経済新聞 電子版








The official land price as of January first 2019, as announced by the Ministry of Land, Infrastructure, Transport and Tourism on January 2019, had been rising for four consecutive years with an up of 1.2% for all commercial, industrial, and residential usage (nationwide). It returned to about 40% of the peak at 1991. The rural area turned positive for the first time in 27 years with a rise in the second consecutive year. While the low interest rate environment underpinned real estate investment and private housing acquisition,  in some overheated urban areas a feeling of slowing down could be felt.

Commercial land rose 2.8%, rising from 1.9% in 2018. The three major metropolitan areas of Tokyo, Nagoya and Osaka had risen by 5.1%, and the recent growth rate was the second highest since 2008, just before the Lehman shock.

Regional central cities had shown even higher growth. In commercial areas, the average rate of increase for the four cities of Sapporo, Sendai, Hiroshima and Fukuoka reached 9.4%. The rate of increase was high in urban areas such as the prefecture capital, and in areas where foreign visitors in Japan chose to stay. The top was 58.8% in area around Niseko of Kutchan-cho in Hokkaido where snow resorts concentrated.

Low interest rate supported the rise in residential areas. The recent decline in land prices had made the market more affordable, and demand had flourished again. The fact that companies were raising wages due to labor shortages was also raising the motivation for individuals to acquire housing. As regional key cities began to hit high prices, demand in the surrounding area also went up. The city of Tosu in Saga Prefecture was valued for its good access to Fukuoka City, and the residential area had risen for two consecutive years.

When an estimate was done based on the rate of change starting from 1991 which was at the peak time for all usage, the price for 2019 had returned to the level of about 40% of 1991. It was about 2% higher than the bottom price of 2015. It rose about 8% in the Tokyo area which had bottomed out in 2013.

While land prices continue to grow, the rate of increase was smaller than in the bubble season which recorded double-digit growth. Land prices in commercial areas of metropolitan areas such as Tokyo were around 20-30% of the bubble period. The "investment backed by real demand" (Ministry of Land, Infrastructure, Transport and Tourism) also supported a strong rise.

Still, in overheated Tokyo area, you could see a pause. Looking at the highest price point in the five wards of central Tokyo (Chiyoda, Chuo, Minato, Shinjuku, Shibuya), the growth rate slowed down except for Chiyoda. For overseas investment money, which had been wary of overheating and was a driving force, a recession was becoming clearer. Even in the newly built condominium market, sales had been sluggish in the Tokyo metropolitan area due to the high price.

              I am interested in knowing whether the 2020 Olympics had played a role in the recent property market growth in central Tokyo.