Roadside land values fall across nation for the 1st time in 4 years

Key land prices used to determine tax amounts dropped nationwide in 2009 for the first time in four years, the National Tax Agency said Wednesday, reflecting the impact of the global financial crisis on the real estate market.

The average value of land facing major streets nationwide fell 5.5 percent from a year earlier to 137,000 yen per square meter, according to the agency's figures.

The roadside land prices as of Jan. 1, which serve as a basis for calculating inheritance and gift taxes, declined in all of the nation's 47 prefectures.

Tokyo and Miyagi and Aichi prefectures, which marked double-digit increases in the 2008 assessment, shed 6 to 7 percent during the past year, a sign of the speed at which speculative funds fled the market.

In the survey, the agency assessed land value at 370,000 selected locations along major roads across the nation.

Of the three biggest urban regions, the Tokyo area--Tokyo and Kanagawa, Saitama and Chiba prefectures--posted a 6.5-percent drop year on year to 331,000 yen per square meter.

The Osaka area saw a 3.4-percent dip, while the value for the Nagoya area dropped 6.3 percent, according to the agency report.

Some prefectures have experienced wide fluctuations.

Miyagi Prefecture, where the average value soared 12.5 percent in the 2008 assessment, had a 6.8-percent fall this year.

Tokyo's 17.4-percent climb last year was followed by a 7.4-percent tumble this year, while Aichi Prefecture had a 10.8-percent growth turn into a 6.3-percent slide.

Hokkaido and Fukuoka Prefecture underwent a similarly sharp turnaround.

The 2009 figures reflect moves of speculative funds that had flowed into the market in recent years through J-REITs (Japan real estate investment trusts) and other means.

Such funds were quickly withdrawn following the "Lehman shock" last fall. Financial institutions also shied away from real estate loans.

As real estate companies went under one after another amid the downturn, property transactions dropped off, leading to the fall in land prices.

A plot before the Kyukyodo stationery store in Tokyo's Ginza 5-chome district was Japan's most expensive for the 24th year in a row, at 31.2 million yen per square meter.

The top place was shared by plots before the Wako and Mitsukoshi department stores in Ginza 4-chome for the third consecutive year.

At these locations, a plot the size of a postcard had a value of 462,000 yen.

The agency's survey also showed that of all prefectural capitals, 39 cities marked a drop in their highest land prices, with the remaining eight with no change.

Yokohama, Chiba and Fukuoka turned from double-digit growths in 2008 to double-digit falls this year.

The highest price in Yokohama was at the west exit of JR Yokohama Station. The price per square meter fluctuated from 5.26 million yen in 2007 to 7.28 million yen in 2008 and 6.52 million yen this year.

(IHT/Asahi: July 2,2009)