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Land prices in Japan have been falling rapidly, and it is not known how much further they will fall. Financial institutions left with bad debts should sell land held as collateral for a fair sum to help recovery. Land prices were expected to rise again, but the value of land has actually fallen to 20% of its worth in 1988. In the Japanese capital land prices had started to recover, but have been falling quickly again since April 1995.

Japan is suffering from a dramatic fall in land prices. The site of the Hotel New Japan, badly damaged in a fire in the early 1980s, was not sold until June 1995, and then for only 59.7 billion Japanese yen versus the June 1994 reserve price of 99.4 billion Japanese yen. Togensha Corp, which was famous for buying expensive land in central Tokyo and building property for rent, has debts of 320 billion yen, because of the collapse of land prices.

Surveys indicate that the Japanese are more interested in maintaining long-term business relationships than in prices, and that prices are higher in Japan than other countries, but this attitude appears to be changing. The Japanese public are realising more and more that prices for foreign goods and for Japanese goods are dearer in their own country than overseas and are becoming increasingly price conscious. They are now using foreign mail order services to buy goods. The attitude of Japanese companies is expected to adjust in line with that of consumers.