Rise in Land Prices: Trend Spreads from Urban Centers to Regional Areas

The recovery trend in land prices is broadening, and its spread from urban areas to regional areas is clear. In addition to reflecting the state of the economy, there have been many cases of land price increases due to areas becoming more convenient. Various areas may serve as a reference for the creation of vibrant communities.

The national average of land prices for all categories of use as of July 1 this year increased by 1.0% from a year earlier, according to a report on benchmark land values released by the Land, Infrastructure, Transport and Tourism Ministry. This was the second consecutive year of increase, and the rate of increase expanded by 0.7 percentage point from the previous year.

Factors behind the increase in land prices include strong housing demand, normalization of economic activities and an increase in the number of foreign visitors to Japan. By category of use, average land prices in residential areas rose 0.7% and commercial land prices rose 1.5%.

By region, land prices in both residential and commercial areas increased at an accelerated pace in each of the nation’s three major urban areas, centering on Tokyo, Osaka and Nagoya.

Furthermore, excluding the three major urban centers, regional areas saw average prices rise for the first time in 31 years for all land-use categories combined and for residential land.

In many regional areas, land prices remained stagnant due to such factors as population decline. For regional economies, it is desirable for land prices to rise gradually. The recovery in land prices needs to be made sustainable.

Earlier, the recovery was clear in the four major regional cities of Sapporo, Sendai, Hiroshima and Fukuoka, but recently it has spread to surrounding municipalities.

There are also notable cases in which the development of transportation and other infrastructure was reflected in land price rises. In Komatsu, Ishikawa Prefecture, there is a location where the land price rose 6.7% due to expectations for the extension of the Hokuriku Shinkansen line next March.

In Tochigi Prefecture’s capital of Utsunomiya, where a light rail transit (LRT) line has opened, land redevelopment projects have progressed, leading to a 4.2% increase in the price at a location near a station.

In other prefectural capitals, which serve as regional cores, there have been an increasing number of cases in which housing demand has been activated by redevelopment around stations in highly convenient central areas.

It is important for local governments to strive to create convenient and easy-to-live-in communities through such measures as consolidating facilities, improving the living environment and providing childcare support.

Opening factories also greatly increases land prices. In the city of Chitose, Hokkaido, and in the vicinity of the town of Kikuyo, Kumamoto Prefecture, where semiconductor factories are being built, there were a number of locations where land prices rose by around 30%.

Demand for land for offices and housing reportedly has risen sharply as related companies also move into the areas. It can be said that the manufacturing industry, which generates a lot of employment, showed a significant presence in the regional areas.

On the other hand, an increase in land prices is a negative factor for prospective homebuyers. Condominium prices are soaring in Tokyo’s 23 wards and other urban areas, partly due to the rising prices of materials.

There is a possibility that overseas speculative funds are driving up prices. The government should keep a close watch on excessive price hikes due to speculative moves.

(From The Yomiuri Shimbun, Sept. 26, 2023)