In parliamentary testimony, Bank of Japan Governor Toshihiko Fukui reiterated the bank's gradualist approach to raising interest rates. He also said land price gains "(do not yet) warrant concern of excessiveness." The BoJ voted unanimously last week to hold its benchmark rate at 0.5%. A closely watched land price report published last week shows some patches of double-digit gains in metropolitan commercial land in 2006, with an 8.9% increase overall for Tokyo, Osaka and Nagoya. Residential land prices rose 2.8%, for the first nationwide increase in 16 years.
My view is that any price gains in Japanese residential real estate will be short-term; as population projections through 2050 have Japan's population shrinking 23% due to an aging population and low birthrates.