Japan's regional land prices rise for first time since property bubble burst in 1990s

Tokyo

LAND prices outside Japan's three main cities rose for the first time since the bursting of a property bubble in the early 1990s, adding to signs that a moderate economic recovery under Prime Minister Shinzo Abe is gradually filtering through to the regions.

The average price of land outside the metropolises of Tokyo, Osaka and Nagoya edged up 0.4 per cent as at Jan 1 from a year earlier, rising for the first time since 1992, according to land ministry data released on Tuesday.

Falling unemployment and higher pay, low interest rates, and demand for hotels and retail space to cater to foreign tourists helped boost land prices, according to the ministry.

Overall, Japan's land prices rose 1.2 per cent, increasing for a fourth straight year, according to the report.

While the rise gives the Abe administration another sign of progress in the economy ahead of local elections, some analysts have warned that the easy supply of cheap property loans made possible by the Bank of Japan's ultra loose monetary policy risks feeding localised property bubbles.

The data also showed that gains in property prices outside Tokyo, Osaka and Nagoya were largely limited to bigger provincial cities such as Fukuoka, Sapporo, Hiroshima and Sendai.

The swanky Ginza shopping district of Tokyo had the highest land price at 57.2 million yen (S$693,000) per square metre. That's well above its 38.5 million yen price tag at the height of a bubble in 1991.

It's also more than 400 times the most expensive land price in Tottori prefecture in western Japan, the prefecture with the lowest figure. BLOOMBERG