Japan's Land Prices Rise for Fourth Straight Year: Cost of Land in Japan Continues Upward Trend

Recent official data show Japan's land prices have risen for several years, driven especially by strong demand in major cities. According to the Ministry of Land, Transport and Tourism, Tokyo's average land price (公示地価) in 2025 was about 1,334,554 yen per square meter (all uses), versus 376,222 yen/m² in Osaka and 331,742 yen/m² in Kyoto. In Tokyo's 23 wards, residential land averaged 771,600 yen/m² and commercial land prices reached 3,590,800 yen/m². In Osaka city, the averages were 282,800 yen/m² (residential) and 2,237,200 yen/m² (commercial). (Kyoto-city values are lower – on the order of ~153,600 yen/m² for residential and ~805,000 yen/m² for commercial in core areas – reflecting its smaller property market.)

Figure: Chart of Tokyo and Osaka metropolitan areas land price trends (2015–2025, index base 2015=100). Over the last decade rising land prices have climbed steeply in Japan's major cities. Nationwide land prices have been up about 1–2% per year recently. In the Tokyo metropolitan area, prices jumped even more: e.g. Tokyo ward residential land prices rose about +7.9% in 2024 (year-on-year) and commercial land prices +11.8%, marking the fourth consecutive year of gains. Osaka city saw more moderate growth (residential +2.7%, commercial +7.6%). This rate of increase is historically large – indeed, land prices across Japan in 2025 increased at the fastest pace in 34 years, "the highest since the collapse of the bubble economy" in 1992. In short, land values in major cities have been surging, while regional areas remain far cheaper. For example, Tokyo-Chūō ward's land can exceed 9.2 million yen per square meter in the most central blocks like Ginza, whereas an outlying area like Tokyo's Edogawa ward is only 413,200 yen/m² (residential). Similarly, Osaka's Chūō-ku is about 3.92 million yen/m², while distant areas in Hyōgo prefecture or Yamaguchi can be on the order of only 20–50 thousand yen/m² (see Fig.).

Price Comparison by Area and Use in Japan's Property Market

City (Area)	Residential Land Price (¥/m²)	Commercial Land Price (¥/m²)	2024 annual change (Res)	2024 annual change (Com)
Tokyo (23 wards)	771,600	3,590,800	+7.9%	+11.8%
Osaka (city)	282,800	2,237,200	+2.3%	+7.6%
Kyoto (city)	~153,600	~805,000	~+2.0% (est.)	~+7.9% (est.)

Table: Recent land prices and annual changes in Tokyo, Kyoto and Osaka. (Tokyo figures are for the entire 23-ward core area; Osaka and Kyoto city figures are urban averages.) These figures use the government's land-price index metric (公示地価) per square meter. The data confirm that Tokyo's land costs are vastly higher than other regions: Tokyo's average land price (>1.33 M ¥/m²) is roughly 4× Osaka's and 40× some rural prefectures. (For perspective, Kagoshima prefecture's average land price is only about 72,267 ¥/m².) Within each city, central wards command the top prices (e.g. Chūō/Chiyoda in Tokyo, Chūō and Kita in Osaka, Shimogyō in Kyoto), while outer wards or suburbs remain much lower, falling below the national average.

Taxation and Policy Factors in Japan's Real Estate Market

Japan's tax system also influences land values. Land is subject to fixed-asset tax (固定資産税) and city-planning tax (都市計画税), typically at 1.4% and up to 0.3% respectively of the assessed value. Local governments often cap sudden jumps: for example, Tokyo's ordinance limits any increase to 110% of the prior year's tax (through 2026). Moreover, special tax breaks apply to residential lots: by national law, a dwelling's first 200 m² of yard/lot is taxed at only 1/6 of the normal rate and the rest at 1/3. (Tokyo's own rules mirror this: e.g. Tokyo wards tax small residential land at 1/6.) These lowered rates reduce the carrying cost of homes, but do little to dampen high demand in expensive areas. For inheritance and gift taxes, land is generally evaluated by national "roadside price" (路線価) rules. These tend to lie below market but can still hit heirs hard if land values jump. Note there is a major "small residential land" inheritance exemption: a family's inherited primary home (up to ~330 m²) may be valued only at 50% or even 20% of market when calculating tax. Farm land used in agriculture can be valued 80% lower. In effect, heavy taxes on land (especially in the Tokyo metropolitan area) encourage people to seek such exemptions or avoid inheritance.

At the local level, land-supply policies also tighten markets. Zoning and the City Planning Law restrict sprawl: large tracts are preserved as farmland or forest, limiting developable land. In Tokyo, Osaka and Nagoya, most flat land is already built-up, so new supply can only come by redevelopment (e.g. tearing down old buildings, or redeveloping underused plots). Plans like the National Strategic Zones and infrastructure projects (Shinkansen extensions to areas like Hokkaido, Olympic redevelopment, etc.) have fueled investor interest near transport hubs. For instance, commercial land demand bounced back with tourism and economic recovery after January 1, 2024, pushing prices up even in outer wards and supporting strong price growth in popular tourist destinations.

Example Price Cases Across Major Cities

Central Tokyo vs. outskirts: In Tokyo's Chūō ward (e.g. Ginza), prices exceed 9.20 million ¥/m² for prime commercial sites. By contrast, in Tokyo's Edogawa ward (far east), average residential land prices are only 413,200 ¥/m². Even within Osaka, central Chūō-ku plots go for ~3.92 million ¥/m², whereas in the suburbs (e.g. Ikeda City) prices are a fraction of that. In Kyoto, downtown (Shimogyō ward) commercial land prices are roughly 3.15 million ¥/m², but prefectures like Kagoshima see only ~72,267 ¥/m². These disparities show how location drives cost of land in Japan's scarce market, with prices in Sapporo, Sendai, Fukuoka and other four major regional cities falling somewhere between metropolitan centers and truly rural areas.

Typical lot values: As a concrete example, a 100 m² residential lot in Tokyo's upscale 23‑ward area might cost on the order of ¥77 million (since 771,600 ¥/m²×100) and carry ~¥1.1 million/yr in property tax. Buying the same 100 m² in a less expensive city (say, Fukuoka where residential land is ~247,398 ¥/m²) would be ~¥24.7 M. Thus investment choices to buy land in different locations make a huge cost difference.

Because land is so expensive, buyers often look for cost-saving tactics:

Timing

Historically, prices rose until 1992, crashed in the 1990s, and only began a long upward trend in the 2010s. Today's gains are unusually high (the fastest pace in 34 years since 1991), so investors may await slower growth periods. In practice, those who bought during the early 2000s or post-2008 dip saw better yields. Moving early in a downturn, or avoiding peak bidding wars, can save tens of percent. Rate hikes by the Bank of Japan could potentially impact this trend.

Location choice

Opting for less central areas yields much lower prices. For example, Western Japan or rural prefectures have land prices often 70–95% below Tokyo's. Even within Tokyo, peripheral wards (like Adachi or Edogawa) are markedly cheaper than Minato/Ginza. Commuting distance areas (outside the urban core) or smaller cities (Kyoto outskirts, Fukuoka suburbs) are attractive to budget-conscious buyers. Areas like Chitose near Sapporo in Hokkaido also offer better value.

Leasehold (借地権) arrangements

Instead of owning land outright, one can lease land long-term (e.g. traditional 50‑year leases). Leasehold values are typically only 60–70% of freehold price, since the land reverts to the owner after the lease. This reduces purchase cost substantially, though it means not owning the fee simple. In high-price regions, some individuals buy the building on leased land (借家) or renew leases, saving millions upfront.

Use tax incentives

Inheritance planning can save tax. For example, keeping land "productive" (e.g. farmland under continuing agriculture) qualifies for big valuation cuts, and passing a primary home can use the small-residence exemption. Likewise, building a qualified "long-term excellent housing" can extend fixed-asset tax reductions on the building for 5 years (land tax breaks last 3–5 years under new-home rules).

Government subsidy programs

Some local governments offer subsidies or reduced-rate financing for buyers (especially families or earthquake-safe home construction). These can indirectly offset high land costs by easing total housing outlays in a low interest rate environment.

In summary, Japan's land prices are costly because of scarce supply and demand for housing and offices. Overall land prices across Japan have climbed steadily in recent years (particularly in the three metropolitan areas surrounding Tokyo, Nagoya, and in industrial areas where semiconductor development is occurring). The development of large-scale