In 2009 Japanese real estate construction fell to its lowest level since the nation celebrated its post-war recovery by hosting the Olympics in 1964, as builders were hit by dwindling household incomes and sustained deflation, according to figures from the Land Ministry.

Construction companies broke ground on 788,410 homes in 2009, that’s -27.9% less than in 2008, however the fall decreased in December 2009 to only -15.7% compared to December 2008.

The report highlighted the inability of the Government to halt the decline of property prices with their stimulus programmes and, as a result, has meant Japan has lost its place as the world’s second-largest economy to China.

Richard Jerram, chief economist at Macquarie Securities, said: ‘It’s been a very miserable year. There certainly is an improvement underway, but it’s been slow to materialise, and it’s starting from very low levels.’

Since an asset bubble burst two decades ago, Japan has been blighted by price declines and sluggish economic growth. An index of residential land prices has slid more than -40% from its 1991 peak, with the average price of condominiums falling -5% in 2009 in the metropolitan areas of Tokyo, Kanagawa, Saitama and Chiba, according to figures from the Japan Real Estate Institute.