Looking to buy land to build on but a little unsure if you’re paying the right price? The best way to determine land prices is to take the time to look at various real estate listings and talk with your agent. With a little research, you will work out how much you can expect to pay in a certain neighborhood.
You may notice some variety with some lots priced lower or higher per square meter or per tsubo than others. There can be several reasons behind this, and your agent should be able to provide some insight as to why.
Points that can influence land prices:
- Ownership rights (freehold vs. leasehold)
- Distance from station
- How wide the street is and the conditions of that street
- Zoning and density
- Condition of the surrounding neighborhood, and if there is anything desirable/undesirable nearby
- Flood or disaster risk or safety
- Shape of the land
- Size of the land
- Current supply and demand conditions
- If there is an existing, old structure that needs to be demolished
Market price ≠ government land values
One common mistake made by first-time buyers is confusing market prices with government land values (and tax values, for that matter). While the periodically published land values can be useful for determining market movements, don’t expect them to come close to market values in an urban setting. In large cities, market prices can sometimes be 1.5 ~ 2 times the government assessed land values, and in regional locations may be closer to 1 ~ 1.1 times the value, or lower in a declining rural area.
The different types of land prices
Market price: How much a buyer is willing to pay. It is affected by the relative scarcity of the land, its attributes, and market conditions at the time.
Government assessed land value (公示地価): Carried out by the MLIT in January on selected urban survey sites.
Standard land price (基準地価): Similar to the above assessed land value but carried out by each prefecture in July and covering more survey sites.
Roadside land price (路線価): Used for calculating inheritance and gift tax on real estate. It is usually around 80% of the government assessed land value.
Fixed asset tax value (固定資産税評価額): This is what your annual property taxes are based on. It is adjusted every three years by the city, town or village where the land is located. The value is usually around 70% of the government assessed land value.
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