TOKYO, March 21 (Reuters) - Japan’s average land prices slipped for a fifth straight year in 2012 but the rate of decline was the slowest of the entire period, potentially signalling a rebound in the property market.
A survey by the land ministry showed land prices fell an average 1.8 percent in 2012 compared with a 2.6 percent fall in the previous year.
The average price of residential land shrank by 1.6 percent from a 2.3 percent drop the year before, while the average price of commercial land dipped 2.1 percent, narrowing from a 3.1 percent decline.
Although both sectors recorded the fifth annual fall in a row, the pace of the declines was the slowest in five years, as the economy emerges from a mild recession.
Prime Minister Shinzo Abe has campaigned for bold fiscal spending and aggressive monetary expansion by the Bank of Japan to energise the sluggish economy and beat deflation.
The Japanese yen has weakened to 3-2/1 year low against the dollar and share prices hit 4-1/2 year high, helped by Abe’s economic policies.
But the land ministry said it was too early to see an impact from PM Abe’s economic policies because the survey only extended to Jan. 1, 2013, shortly after Abe took office.
The improvement in land prices was also partly driven by tax breaks on housing loans and active real estate investment trusts (J-REIT) in big cities, the survey showed.
Land prices in the northeastern areas hit by the March 2011 earthquake and tsunami and subsequent nuclear crisis also continued to improve -- supported by rebuilding works, the survey found.
Residential land prices in Miyagi prefecture rose 1.4 percent last year from a 0.7 percent fall the year before. Miyagi is the only prefecture whose residential land prices increased in 2012.
Falls in Fukushima prefecture narrowed to 1.6 percent from a 6.2 percent drop.
Japanese land prices declined for most of the years following the bursting of the real estate bubble in the early 1990s, except for brief signs of recovery in the mid-2000s. But land prices dropped again in the 2008/2009 global financial crisis. (Reporting by Kaori Kaneko; Editing by Eric Meijer)