TOKYO -- Land values continue to fall beyond Japan's urban areas despite an uptick overall, highlighting population drain's polarizing effect on the real estate market.
Appraisal values on commercial land in 31 of the country's 47 prefectures came in below year-earlier levels as of Jan. 1, the land ministry said Tuesday. Residential values declined in 37. Akita Prefecture's commercial land values fell 4.2% for the steepest drop in the nation, bringing prices more than 40% below their 2008 level.
The prefecture's population is in rapid decline. The city of Oga, where residential and commercial values fell 5.3% and 5%, respectively, lost 12.1% of its residents in five years, Japan's 2015 census shows. Shuttered storefronts and vacant land surround the main train station and the seaport of Funagawa. Many businesses have shut down for lack of successors, the owner of a still-open shop said, lamenting the decline.
Land values are unchanged from last year near a major tourist destination in Hakodate, Hokkaido, which is set to receive bullet train service in late March. Prices have been slower to recover there than in Kanazawa, Ishikawa Prefecture, where high-speed rail service began in 2015.
Surging prices in urban centers experiencing redevelopment could indicate overheating, some market watchers say. Real estate investment trusts and other vehicles have sent a flood of investment capital into these areas in anticipation of climbing rents. But office inventories are seen rocketing going forward, threatening to chill the market if tenants cannot be found.
Rising condominium prices in Tokyo, Osaka and elsewhere are making convenient housing unaffordable for ordinary company employees. January asking prices on existing condos in the six special wards that constitute central Tokyo averaged 71.37 million yen ($635,692) for 70 sq. meters, real estate research firm Tokyo Kantei reports. The figure is 0.1% under the December 2015 level but 40% above the recent low in October 2012.
The Bank of Japan's negative interest is driving down mortgage rates, giving the property market a boost. Yet a sense that housing is overpriced could cool condominium demand, dampening the recovery in land values.