Japanese land prices fell at the fastest pace for five years in 2009, as the nation's weak economy struggles with another bout of deflation, official data said Thursday.
Costs across the country fell 4.6 percent on average, the land ministry said in its annual land price survey, the biggest drop since 2004, when they fell by 5.0 percent.
The country's core consumer prices also logged the 11th straight month of decline in January, as the country continues to be dogged by deflation.
The survey, which provides a benchmark for land transactions and property taxes, showed prices in commercial areas lost 6.1 percent while residential real estate slipped 4.2 percent.
Faced with dwindling profits in the throes of the recession, many companies have moved to cheaper offices while postponing building new factories and making other land-related investments, the government said.
"Rates of the office vacancy have been rising, especially in the expensive Tokyo metropolitan area because firms can't afford the rent," a land ministry official told Dow Jones Newswires.
"Land prices are falling due to shrinking demand, which is a clear symptom of deflation," the official said.
Land prices had been rising since 2006 for the first time in 16 years as the world's second-largest economy gradually recovered from a decade-long slump.
Japan endured a decade of on-off recessions and economic stagnation in the 1990s after its property market bubble burst.
That collapse helped push the economy into a long deflationary spiral, causing consumers to put off spending and leaving banks saddled with bad loans.
Copyright 2010  AFP Asian Edition
