Japanese residential land prices fell to a 24-year low as job losses and wage cuts discouraged homebuyers, while tighter credit markets choked off funding for property developers.
Residential land prices fell 3.2 percent in 2008 to the lowest since 1984 and average commercial land prices dropped 4.7 percent to a three-year low, the Ministry of Land, Infrastructure, Transport and Tourism said today in a report. Overall property prices declined 3.5 percent, erasing two years of gains that followed a 15-year slump.
The decline in residential land values, which are about half of what they were at the height of Japanâ€™s bubble economy in 1991, may continue as the recession deepens. The central bank forecasts the sharpest economic contraction in more than 60 years as an unprecedented decline in exports forces companies to cut production and fire workers.
Land prices have, of course, lain at the heart of the ongoing Japanese deflation problem. Do people still think they know what all those toxic assets lying about out there are actually worth? I mean, Japanese land values are just about to go below prices established more or less 25 years ago. So in property market terms at least, it isn’t the lost decade anymore, we’re moving in to the “lost quarter century”.