The official land price is the declared price as of January 1 for standard locations. Surveyed every year since 1970, it is widely utilized for land acquisition transactions, inheritance appraisal, and fixed asset tax assessment. With the announcement of the 2022 official land price, we analyze what changes have occurred compared to before COVID.
What Was the State of the 2019 Official Land Price?
The 2019 official land price recorded a rise of +1.2% year-on-year for the national average for all use categories (residential, commercial, industrial). Let's look in detail at the market reality shown by this figure.
4 Consecutive Years of Rising Land Prices
The 2019 official land price showed steady growth in both residential and commercial land. In particular, all use categories including industrial land in the three major metropolitan areas of Tokyo, Nagoya, and Osaka rose, with positive turns seen even in regional areas. The national average for all use categories rose for 4 consecutive years, with the rate of increase expanding for 3 consecutive years. The rise in the regional area all-use category average and residential land was the first in 27 years.
How Did COVID-19 Impact Land Prices?
With the spread of COVID-19 from 2020, real estate markets temporarily contracted. Commercial land in tourist areas and city centers saw significant declines, while residential land in suburbs maintained relative stability. Remote work spread and lifestyle changes also shifted demand from urban center condos to suburban single-family houses.
2022 Official Land Price: Signs of Post-COVID Recovery
The 2022 official land price showed these characteristics:
- Overall national trend turns positive: All-use category national average +0.6%
- Tokyo, Osaka, Nagoya recovery: Three major metropolitan area commercial land returned to pre-COVID levels in some areas
- Regional cities also recover:札幌 (Sapporo), Sendai, Hiroshima, Fukuoka, and others remain strong
- Areas with slow recovery: Tourist spots dependent on inbound demand remain depressed
Investment Judgment Points Based on Land Price Trends
For property investors, the following perspective is important from land price trend analysis:
- Understand the difference between macro trends (national) and micro trends (individual area)
- Areas where commercial land and residential land trend differently require strategies appropriate to each
- Suburbs where post-COVID lifestyle changes push up land prices may be new investment targets
For investment judgment reflecting market data, see Why Is Real Estate Investment Difficult?
FAQ
- Q. How do official land prices relate to actual real estate prices?
- A. Official land prices are used as one reference value. Actual transaction prices are influenced by supply-demand conditions, building conditions, and individual negotiations. Generally, actual prices are said to be around 80-120% of official prices.
- Q. Will land prices continue to rise in 2023 and beyond?
- A. In urban areas with strong demand and active redevelopment, continued upward trends are expected. However, areas dependent on inbound demand and those with continued population decline require careful monitoring.
- Q. What should investors check to use land prices?
- A. It's important to check not just the national average but the trend in the specific municipality and district of the target property. The Ministry of Land, Infrastructure, Transport and Tourism's official land price search system enables detailed research.
