Thursday, March 22, 2012 - 04:00

Japan 2012 Land Price Posts 4th Straight Drop But Pace Slower

TOKYO (MNI) - The average national price of land for all purposes measured at the start of 2012 fell 2.6%, a fourth annual drop, amid uncertainty caused by the European debt crisis, the strong yen and the aftermath of the earthquake disaster, the government said on Thursday.

But the pace of decline in the average land price for 2012 decelerated from -3.0% in 2011 and -4.6% in 2010, data from the Ministry of Land, Infrastructure, Transport and Tourism showed.

Of the 25,494 locations surveyed this year, 546 spots showed land prices rose on the year, up from 193 last year, while price drops were seen in 23,099 spots, down from 24,232 in 2011. Land prices were unchanged in 1,849 locations.

The March 11 disaster last year had a negative impact on trading in real estate and its prices but it faded later in the year, a ministry official told reporters.

The national average price of land for all purposes fell 1.3% on year in the first six months of last year before falling 0.9% in the second half of 2011, the survey showed.

The largest price drop in the 2012 survey, down 18.3%, was recorded in Ishinomaki, a northeastern coastal city in Miyagi Prefecture, where more than 20,000 buildings were wiped out by the earthquake and tsunami and over 10,000 were seriously damaged.

The disaster left more than 19,000 dead for missing in Japan caused the worst nuclear accident in 25 years.

In the latest survey, the ministry was unable to survey 17 spots which were located in a nuclear exclusion zone along the Pacific Coast in Fukushima Prefecture.

The pace of declines in land prices for both residential and commercial use decelerated, thanks to an improvement in demand for real estate, the survey showed.

The national average price of land for residential use fell only 2.3% on year as of Jan. 1, compared with -2.7% in 2011. It was a fourth straight annual decline.

Demand for land improved in some big cities such as Tokyo and Nagoya, thanks to low mortgage rates and government subsidies for building energy-efficient homes, the ministry official said.

The ratio of new condominiums in Tokyo and surrounding cities on which purchase contracts have been signed compared to the total supply of new condominiums in this area stood at 75.3% in February, staying above the key 70% level for six months in a row, according to the Real Estate Economic Institute.

Meanwhile, the national average price of land for commercial use fell 3.1% at the start of this year, down for the fourth straight year, but the pace of decline decelerated from -3.8% in 2011.

Land prices in some redeveloped business districts rose and declines in office rents in central parts of some big cities slowed, the ministry official said.

The average office rent per 3.3 square meters in central Tokyo wards fell only 3.6% on year in January, compared with a 7.2% y/y drop seen a year earlier, data from the real-state firm Miki Shoji showed. ** MNI Tokyo Newsroom: 81-3-5403-4838 **

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