According to government statistics, Japanese land prices rose for the first time in 16 years last year. Average residential land prices rose 0.1 per cent nationwide in 2006, while commercial land prices rose 2.3 per cent. The increases were anemic but given almost two decades of real estate losses, the Japanese were happy to see the change in direction.

The Japanese property bubble is now just a horrible memory, softened by the passing of time. At the height of the bubble, the land beneath the Imperial Palace in Tokyo was supposedly worth more than the entire state of California. In 1989, prices were highest in Tokyo's Ginza district, where land was changing hands for over US$1.5 million per square meter ($139,000 per square foot). However, by 2004, prime "A" property in Tokyo's financial districts were less than 1/100th of their peak. Things were a little better for Tokyo's residential homes, they were worth 1/10th of their peak valuations.

There is one much less commented upon aspect of the Japanese real estate crash - its speed, or lack of it. It was slow, real slow, like watching paint dry. It took years of painful gradual downward price adjustment. Disbelief was the real driver of the crash. No one in Japan wanted to believe that land had become so overvalued.

There was no comfort in this lack of energy. The subsequent damage to the Japanese economy was enormous. The ten years after the real estate peak are now known in Japan as the lost decade. Furthermore, the economy over there still has a long way to go before recovery is assured. Government indebtedness increased dramatically during the last decade, and it is a problem that will come back to haunt the Japanese for decades to come.

Will it also take 16 years before the US real estate market recovers from the excesses of the last five years? Probably.