Most social and economic activities are based on land, which is included among high-dimensional goods. The balance between supply of and demand for land is maintained, by its price. However, its supply cannot be controlled. Land prices rise, not with demand, but with the increase in utility value resulting from the construction of railways and redevelopment. As the price of a plot of land is determined by the sales price of land nearby, high prices for neighboring areas due to increased utility value influences the price formation for land in outlying areas without changing their own utility value. Such a phenomenon was observed in small towns when land price in the Tokyo metropolitan area suddenly rose in the late 1980s. In order to better understand the mechanism for land price fluctuations in this area, this paper aims to demonstrate the disparity between the price and use of land on the micro scale and to clarify the characteristics of the rise in land prices in the commercial area of a small town, with the area around the JR Nishifunabashi station as an example. The results of the analysis are as follows: 1) The low interest rate policy and the resultant business boom in the 1980s activated transaction and finances involving land. As a result, land prices rose sharply in commercial areas around stations along the JR Sobu line over the three-year period 1985-1988. Many areas that showed a higher rate of appreciation in this period have developed as major commercial areas. On the other hand, the area around the Nishifunabashi station showed the highest rise in the 1988-1991 period, when the appreciation of land prices had eased off in all commercial areas. This belated rise was influenced by the appreciation of land prices in the area around the nearby Funabashi station and is therefore different from the phenomenon widely observed from 1985 to 1988. 2) In the study area, the area of expensive land to the north of the station did not expand during the period 1985-1988, although the price difference increased. In 1991, however, the land on the south side of the station, where a number of large parking lots were located, appreciated in value, and the price became higher than in the northern area on the whole. The price difference with in the study area grew even greater. 3) In contrast to the changes in the land price distribution, no remarkable changes were observed in land use in the study area. Such a precursory rise in the land price could be attributed to the inability of local commercial capital to cope with the rapid rise occurring in the area. It seems that the delay in the effective utilization of land in the northern area relatively improved the estimated value of the more promising land in the southern area. The 1991 appreciation in the southern area resulted from this situation. Concerning the relationship between the rise in land prices and changes in building height, most medium-high-rise and high-rise buildings were situated in areas where land was expensive, although some had been built within such an area in 1991. In addition to the shortage of local funds, setting the land price on the basis of the medium-and long-term forecast had led to this phenomenon. Lands assessed according to the projected value is not immediately utilized in accordance with the present circumstances.