Land prices in Japan rebound in 2021 after pandemic

* Nationwide average land prices +0.5% in 2021 vs. -0.5% in 2020

* Land prices up in 20 of the 47 prefectures in 2021 compared to 7 in 2020

* Real estate inflation remains modest in Japan

* Impact of border control remains as Japan slowly reopens to foreign tourists

TOKYO, July 1 (Reuters) – Land prices in Japan have rebounded in 2021 after falling in the previous year, the government said on Friday, showing signs of recovery in the country’s housing market battered by series of coronavirus restrictions and border controls against foreign tourists.

However, the increase remains much more modest than in other major economies such as the United States, where house prices have been among the factors of consumer inflation.

The modest rebound in Japanese property values ​​will likely reinforce the central bank’s commitment to maintaining an ultra-accommodative monetary policy to support a tepid economic recovery.

Average land prices rose 0.5% in the year to Jan. 1, according to the National Tax Agency’s survey of 317,000 locations across Japan to calculate inheritance tax and donation on properties.

That marked a rebound from a pandemic-driven 0.5% decline in 2020, which was the first decline in six years as demand for offices and services slumped.

“Overall, the impact of COVID-19 has gradually diminished and land prices have recovered from the previous year,” a tax agency official said at a press briefing. citing a Lands Department investigation in March.

The recovery was led by densely populated cities – with average land prices in 20 of the country’s 47 prefectures, including Tokyo, Osaka and Aichi – rising. In 2020, only seven prefectures saw land prices increase.

The most expensive location in the 2021 survey, an area facing Tokyo’s lavish Ginza shopping street, was priced at 42.24 million yen ($309,156) per square meter. The price fell for a second year, however, due to a lack of foreign tourists in Tokyo, the official said.

After two years of strict border controls to fight COVID-19 infections, Japan began gradually reopening to tourists from June 10, although arrivals remained well below the pre-pandemic peak of 2019, when nearly than 32 million foreign travelers have visited the country.

Nearly 90% of major Japanese businesses backed reopening tourism, a Reuters poll showed last month, with many expecting the move to help Japan recover from the pandemic.

Meanwhile, economists polled by Reuters said further easing border restrictions for foreigners would be the most effective way for the government to stem the recent decline in the yen. ($1 = 136.6300 yen) (Reporting by Kantaro Komiya; Editing by Sam Holmes)

Esther L. Steinbach