Rise in Official Land Values: Government, Households Need to Assess Future Risks

Editorial

14:35 JST, March 18, 2026

For the present, there can be said to be a steady rise in land values that reflects the economic recovery. However, the situation in Iran is increasingly tense, creating significant uncertainty about the future. It is important for both the government and households to assess the risks.

According to official land values as of Jan. 1 released by the Land, Infrastructure, Transport and Tourism Ministry, the national average value of land for all purposes rose 2.8% from the previous year, marking the fifth consecutive year it has increased. The rate of increase was up 0.1 percentage points from the previous year, reaching its highest level in 35 years.

By category of use, residential land values rose by 2.1% and commercial land values by 4.3%. In addition to strong demand for condominiums continuing mainly in central Tokyo and central parts of Osaka City, construction of hotels and retail stores catering to visitors to Japan remains robust, driving up land values.

This trend has spread to regional areas, with values rising at more than half of all surveyed locations. In Toyama Prefecture, the rate of increase for residential land values turned positive after remaining almost flat the previous year, while in Aomori Prefecture, the rate of growth for commercial land values shifted from negative to positive.

Japan has aimed for economic growth in which wages and prices increase stably and interest rates and land values also rise. The fact that Japan has exited the COVID-19 pandemic and that land value increases have become established can be said to be positive signs in that sense.

To achieve high growth, it is essential to promote domestic investment. The trend of factory expansion driving up land values is also a positive factor.

Locations in Chitose, Hokkaido — home to Rapidus Corp., which aims for domestic production of next-generation semiconductors — ranked first and second nationwide in commercial land value growth. In anticipation of population growth driven by the clustering of related industries, demand there for hotels and retail stores is reportedly robust.

However, it will be crucial to assess whether the virtuous economic cycle and the steady rise in land values will continue. This is because the situation in Iran could have a significant impact on the economy.

If the de facto blockade of the Strait of Hormuz persists for an extended period, it will lead to crude oil prices remaining high. In that case, inflation could accelerate, and there are also concerns that “dollar buying in emergencies” could drive the yen lower and the dollar higher.

If consumer sentiment further deteriorates and caution regarding an economic turndown intensifies, the real estate market might become unstable.

The real estate market in central Tokyo has so far shown signs of overheating amid rising land values. In Tokyo’s 23 wards, residential land prices rose by 9%, a rate 1.1 percentage points greater than the previous year. In Tokyo, the average price of used condominium units has exceeded ¥100 million for the first time.

If high crude oil prices further fuel inflation, it will drive up housing prices and construction costs. At the same time, rising mortgage rates also may dampen the desire to purchase homes.

The government needs to closely monitor any signs of instability in the real estate market.

(From The Yomiuri Shimbun, March 18, 2026)