Japanese land prices rose for the first time in 16 years in 2006, according to government figures which confirm that Japan is finally pulling out of asset deflation and that the economic recovery is broadening across the country.
Average residential land prices rose 0.1 per cent nationwide in 2006, while commercial land prices rose 2.3 per cent, the widely watched survey showed.
The rise compares with a 2.7 per cent drop in residential and commercial land prices the previous year, and represents the first annual rise since Japan's asset price bubble burst in 1990.
The rise is expected to provide a fillip to consumer sentiment and a boost to economic activity.
"There is obviously a useful wealth effect element to it," said Richard Jerram, chief economist at Macquarie Securities in Tokyo.
However, it has also been a factor behind the Bank of Japan's eagerness to raise interest rates in the face of political opposition.
Toshihiko Fukui, the central bank governor, told the Japanese parliament yesterday that rising land prices and currency rates could affect monetary policy.
- (Financial Times service)
