Higher land prices reflect lifestyle changes amid COVID-19 pandemic

Land prices have started to rise again after falling due to the novel coronavirus pandemic. The government needs to closely examine the changing trends in the demand for land caused by the pandemic.

According to official land values as of Jan. 1 this year released by the Land, Infrastructure, Transport and Tourism Ministry, the national average value of land for all purposes rose by 0. 6% from a year earlier. Residential land prices increased 0.5% and commercial land prices rose 0.4%. Both figures marked their first rise in two years.

When land prices go up, the value of possessed assets increases, thereby improving household and business sentiment. Higher land prices have a positive impact on the economy as a whole, so it is desirable for prices to rise slowly. The government should make efforts to stabilize land prices.

The latest official land values showed strong demand for residential land. This has been attributed to more people wanting better housing as a result of spending more time at home, due to their voluntarily refraining from going out and the increase in telecommuting.

Luxury condominiums are selling well in central Tokyo, especially for high-income, dual-earning couples. Many people are said to be seeking spacious housing in the suburbs from which they can telecommute.

In commercial areas as well, demand is strong for land for condominiums with stores on the first floor. Housing investment trends are believed to be affecting land prices.

Due to the coronavirus pandemic, more people are shopping near their homes rather than in central Tokyo. As a result, land prices in commercial areas near train stations close to residential areas are moving upward.

These trends are highly likely to continue for the time being. It is important to accurately ascertain changes in people’s lifestyle and reflect these changes in future community development.

However, there are still some commercial areas where prices continue to fall.

Dotonbori, Shinsaibashi and Nanba in Osaka City had some of the highest rates of decline nationwide. These areas had seen a sharp increase in foreign visitors to Japan in the past, and land prices there had risen sharply due to demand for land for hotels and drugstores.

In contrast, land prices in some tourist spots, such as Asakusa, Tokyo, and Higashiyama, Kyoto City, have started to increase thanks to a recovery in domestic tourism.

Many local economies are supported by tourism.

The central government intends to expand a discount service that is currently limited to travel within prefectures, to regional blocks including neighboring prefectures, before the full-fledged resumption of its Go To Travel tourism support campaign. It is vital to devise measures to stimulate demand for domestic tourism.

The expansion of online shopping due to stronger demand from people staying home has led to greater demand for land for logistics facilities in the suburbs of large city areas. The land price for a location in Ichikawa, Chiba Prefecture, has risen by about 20%.

The central and local governments need to encourage the use of land to streamline logistics, while being cautious about excessive land price increases.

— The original Japanese article appeared in The Yomiuri Shimbun on March 24, 2022.