In Japan, half of the population lives on less than 15 percent of the land. The overcrowding in the metropolitan areas resulted in skyrocketing urban land prices through the last four decades. Land accounts for more than half of the gross household wealth. Dwellings are financed by mortgages. Yet land-price inflation is seen to be insensitive to the mortgage rate. This is in sharp contrast to corporate stock prices which are inversely related to the nominal interest rate. This paper gives a simple demand-and-supply model of the urban land market, and attributes the phenomenon to the role of land-price inflation expectations. It shows how easily a “bubble“ can occur in the land market such as those experienced in the early 1970s and the late 1980s in Japan.