TOKYO (REUTERS) - Japan's average land prices fell 1.8 percent in the year to January but the pace of decline was the slowest in five years, underscoring a view that the market is steadily recovering.
The fall in average land prices followed a 2.8 percent drop in 2011 and a 3.1 percent decline in 2010, a survey from the National Tax Agency showed.
Prime Minister Shinzo Abe's sweeping policy mix of monetary easing by the Bank of Japan and huge fiscal spending have helped to improve business and consumer sentiment, raising hopes for the economic outlook.
With demand for housing expected to pick up before Japan's planned sales tax hike next April and with better economic prospects, land prices will likely continue to improve.
Two prefectures saw average land prices rise last year for the first time in five years and the pace of price declines in other prefectures eased.
Average land prices in northeastern Miyagi prefecture rose 1.7 percent, boosted by rebuilding efforts following the March 2011 earthquake and tsunami.
And prices in the nation's central Aichi prefecture edged up 0.1 percent, helped by stronger demand for both offices and residential property.
The rate of decline in land prices in Tokyo and its neighbouring prefectures shrank to 0.6 percent last year from a 1.5 percent fall the previous year.
Japan's highest land price, in Tokyo's Ginza shopping district, was 21.52 million yen (S$274,900) per square metre last year, but that was still down 41 percent from 36.5 million yen during the real estate bubble of the early 1990s.
The tax agency surveys land prices as of Jan 1 every year to calculate inheritance and gift taxes on properties.
Japan's economy has been picking up this year and expanded at an annualised rate of 4.1 percent in the first quarter, led by private consumption and a rebound in exports.