Interaction between Land Price Increase and Spatial Changes in the Metropolitan Areas

Abstract

The land price fluctuation is a time series of phenomenon. So, it needs to understand the mechanism of the land price fluctuation from a long-term point of view. In this paper, the influences of the land price increase in the late 1970s on the land price fluctuation in the next period were examined. The findings of the analysis are summarized as follows.
The land price increase in the late 1970s occurred by the interest rate cut in the economic stagnation after the first oil crisis and the peculiarity of the land market. Most of the residents in metropolitan areas had not been able to buy land any more when the land price increase exceeded their income growth. Additionally, the delay of the estates development in the suburbs due to the economic slump caused the amount of land supply to decrease.
As a result, the residential land market inside metropolitan areas stagnated in the first half of 1980s. The people who had given up purchase of land were oriented toward living in condominiums in the surrounding areas of inner city. The condominium development increased the land demand, and caused the redevelopment and the mixture of land using. These phenomena made speculative transactions in land and spatial spreading of the land price fluctuations accelerated.
Sharp rise in commercial land prices of the late 1980s was a spreading phenomenon, which had its origin in brushfire rise in the inner city of Tokyo. This increase of land price has a close relationship with the boom of condominium development by the reduction of residential land market in the first half of the 1980s. The rise in the late 1970s and the rise in the late 1980s are regarded as a series of phenomena though the two progressed by the respectively different mechanism.