The 0.1 percent year-on-year rise in Japan's average land price as of July 1 — the first such gain since 1991 at the height of the asset-inflated bubble boom — reflects strong office demand by businesses earning robust profits and the continuing boom in inbound tourism that's pushing up demand for hotels and shops. Land price increases continue to be particularly steep in areas that attract large tourism demand.
Fixed asset taxes levied on real estate based on property value is a key source of revenue for local governments. Both in order to ensure stable tax revenue and create more jobs for youths to reverse the population exodus, local governments across Japan should make all the more efforts to promote their local tourism sector.
Back in 1990, the national average price of land including commercial, residential, industrial and other use rose 13.7 percent — the sharpest on record — but after a 3.1 percent gain in 1991, property prices have been on a downtrend for more than a quarter century as Japan's economy entered the protracted doldrums of the post-bubble years. Even with the halt to the downtrend, residential land prices remain around 50 percent and commercial land about 30 percent of the levels observed during the bubble.