TOKYO, NOV. 6 -- The Great Japanese Real Estate Bubble has begun to deflate, according to a government report released today.

The report, based on a survey by the Construction Ministry, showed land, house and condominium prices have fallen by as much as 30 percent in Tokyo, Osaka and surrounding areas during the past three months.

The survey confirms what many analysts here have been predicting: After five years of skyrocketing to levels far beyond the reach of ordinary Japanese, housing prices are finally starting to obey the laws of financial gravity.

Although welcomed by many -- especially those hoping that housing may become more affordable here -- the news is also unsettling. If real estate prices fall too far and too quickly, the result could be severe damage to the Japanese financial system and, ultimately, to the world economy.

Japanese banks and insurance companies are already reeling from this year's sharp decline in the stock market. Banks in particular would suffer further from a real estate crash; they lent tens of billions of dollars over the past few years to finance real estate purchases at inflated prices. Losses on their real estate portfolios would, in turn, make Japanese financial institutions less able to provide capital for global economic growth.

Few analysts are expecting a serious collapse, however, and the declines that appear to be occurring are regarded by government officials as representing a healthy correction. The government has been pursuing policies aimed at producing a gentle falloff in prices.

The central bank has driven interest rates steadily upward since March 1989, making it considerably more costly for speculators to hold onto land they have borrowed to buy. Moreover, bank regulators have cracked down on loans to speculators, and the powerful Finance Ministry is pushing a new national land tax.

The Construction Ministry report suggests that these policies are beginning to have an effect.

The report, based on a survey of 69 real estate offices, is not as thorough a survey as some others compiled by government agencies. But unlike the more extensive surveys, it is up-to-date, being based on October data, and it is the first major survey to show a substantial reversal in the constant price climb since 1986.

Real estate prices more than doubled in Tokyo during the 1986-88 period before leveling off, and a similar increase hit Osaka during the 1988-90 period. The price of condominiums in Tokyo averaged about $650,000 this year; in some parts of downtown, relatively tiny condos were selling for more than $1 million.

The latest survey shows that condominium prices in some towns surrounding Osaka and Kyoto -- two of the country's hottest markets -- were down by about 30 percent during the August-October period from the May-July period.

In the Saitama and Chiba prefectures adjacent to Tokyo, condo prices dropped 15 percent to 20 percent, and elsewhere in the Tokyo metropolitan area the decline was 5 percent to 15 percent, according to the survey.

Prices of land and houses also fell in the areas surrounding Tokyo and Osaka, though not as much as condo prices. In some parts of the Nagoya region, prices of houses and land rose during the survey period.