The Japanese government has reported that the recovery in land prices over the last few years has ceased. A SMH Online journalist suggests this could signal a move back to deflation. I would suggest not because the asset collapse is being accompanied by a slowdown in economic activity and the printing of more money by international central banks, including the Bank of Japan.
Certainly there is room for further falls in inner city property prices, which is why we have always advocated that investors or owner occupants should be focused on the lifestyle (rural) and outer city areas where there has been depopulation keeping property prices down. These areas remain goodbuying. Weak property prices doesn't mean deflation, though you might regard it as an element of asset deflation.
Residential land prices fell 3.2% in CY2008 1 and commercial land value fell 4.7%. These falls in property prices of course come after 16 years of falls that only bottomed in 2006, so the market is still very cheap. For this reason I say, property is going to fall further in the city (asset deflation), but not likely, or not significantly in rural and fringe city areas, where there are tenants. Just make sure you rent out to security-conscious government workers. Maybe you can advertise on the notice board at the city office when you are there to buy foreclosed property.
The good news is that Japanese investors will be scared to buy even foreclosed property in these market conditions, particularly with Japanese investors likely to listen to journalists with no knowledge or life experience to speak of. But of course it does sell! Be discerning, and be selective, and you will be ok.
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Andrew Sheldon www.sheldonthinks.com
Certainly there is room for further falls in inner city property prices, which is why we have always advocated that investors or owner occupants should be focused on the lifestyle (rural) and outer city areas where there has been depopulation keeping property prices down. These areas remain goodbuying. Weak property prices doesn't mean deflation, though you might regard it as an element of asset deflation.
Residential land prices fell 3.2% in CY2008 1 and commercial land value fell 4.7%. These falls in property prices of course come after 16 years of falls that only bottomed in 2006, so the market is still very cheap. For this reason I say, property is going to fall further in the city (asset deflation), but not likely, or not significantly in rural and fringe city areas, where there are tenants. Just make sure you rent out to security-conscious government workers. Maybe you can advertise on the notice board at the city office when you are there to buy foreclosed property.
The good news is that Japanese investors will be scared to buy even foreclosed property in these market conditions, particularly with Japanese investors likely to listen to journalists with no knowledge or life experience to speak of. But of course it does sell! Be discerning, and be selective, and you will be ok.
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Andrew Sheldon www.sheldonthinks.com
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