The latest land price data from the government appears to confirm that asset deflation, in which prices of land continued falling over a protracted period, has come to an end, at least in urban centers. But the situation outside the three big metropolitan areas surrounding Tokyo, Osaka and Nagoya remains mixed, though generally improving. While land prices in the core regional cities of Sapporo, Sendai, Hiroshima and Fukuoka keep rising even faster than in the major metropolitan areas, prices in the rest of the nation's regional economies — particularly in rural areas suffering from the population exodus — lag behind.

Rising demand for hotels and shops in response to continued increases in inbound tourists, along with a steady demand for housing fueled by increased jobs, low interest rates and tax breaks on housing loans, shore up property prices in big cities. Prices are also starting to pick up in some parts of the nation's rural regions, but that is mostly limited to areas around prefectural capitals or in city redevelopment projects in convenient locations such as those close to key transportation hubs such as train stations.

Fixed asset taxes imposed on real estate constitute a key source of income for municipal governments. To secure stable tax revenue for the local governments, policy steps are needed to keep land prices at steady levels across the country.