The small house on my land has decreased to the point where I pay less than $100 a year in taxes on it.
The land that it's on has increased by around 30x in the last 50 years.
It's valuable to be next to useful places. This value of proximity could be increasing so rapidly that it would wash out the value of any particular residential building you could put there.
The only reason someone would buy it is to speculate that one day you can build something there.
Zoning dictates prices, it's a struggle to get people to understand that sometimes.
This makes the land much more valuable - a plot can be repurposed when necessary, especially when the zoning rules and taxation encourage it too.
In Japan it seems regulatory process is easy, hence price drops.
I'd add that probably building a lot of social housing inflates the market as well...
The market does not inflate price, the market assigns value. In a hot real estate market, prices are value-driven, not cost-driven. In quieter markets, where supply of land is high, and builders are not booked out 1-2 years in advance, prices are cost-driven.
And supply is set by regulation, regardless of cost...
I don't know what's going on in any particular place but the potential for regulations to affect supply and demand is clearly there.
There is more to it than monetary considerations however, communities will be destroyed, the feelings and romantic notions people have about the area will be stepped on.
It's possible for land to be valuable and worth owning while buildings are not viewed as investments. I'm not convinced that SF owners of single family properties would necessarily be financially harmed by a major relaxation of density restrictions. It's entirely possible that the value of living space per square foot could go down while the value of land per sq foot goes up.