"If they puncture the land price balloon, it would shock the market, but they're not going to do that," Pike said.
The Bank of Japan report called for reforms to curb property speculation and encourage more efficient land use. Financial institutions should also be monitored, it said.
"In our view, the report showed that the Bank of Japan was serious about the land-price problem," said Kermit L. Schoenholtz, senior economist at Salomon Bros. (Asia) Ltd.
He said the report, which attributed some of the land-price inflation to easy credit, indicated that the central bank would keep interest rates high to help curb excessive lending to land speculators.