By Leika Kihara
TOKYO (Reuters) - Japanese land prices rose for the second straight year in the year to July with the increase spreading beyond big cities, a government survey showed, a sign the benefits from the central bank's ultra-low interest rate policy are broadening.
The 0.4 percent increase in average land prices was faster than the previous year's 0.1 percent gain and driven partly by rising property prices in regional Japan, the survey showed on Thursday, underscoring the strength of the economy's recovery.
The survey by the land ministry captures the prices of land on July 1 and compares the rate of growth against the same period a year earlier.
Land prices are among data closely watched by the Bank of Japan to gauge how its ultra-loose monetary policy is affecting the economy and asset prices.
Commercial land prices in regional Japan, which excludes metropolitan areas surrounding Tokyo, Osaka and Nagoya, were up 0.3% in the year to July 1, turning positive for the first time since Japan's asset-inflated bubble collapsed 28 years ago.
A steady increase in inbound tourists and ultra-low interest rates propped up demand for hotel construction and office buildings, the government said in the survey.
Nationwide commercial land prices rose 1.7% after a 1.1% gain the previous year, helped by strong office building demand in major cities, the survey showed.
Residential land prices slid 0.1%, a slower pace than the previous year's 0.3% decline, the survey showed.
The ministry surveyed about 21,500 locations nationwide. The survey is used as a standard for land transactions, together with another one published by the ministry in March.