* Average land prices nationwide slip for 7th straight year

* Prices diverge between major cities and outlying areas

* Land costs in Tokyo may rise further on foreign demand (Add details)

By Junko Fujita

TOKYO, July 1 (Reuters) - Japan's priciest plot of land hit a 22-year high even as nationwide prices notched a seven-year slide, widening the divide between major cities and the outlying regions, a government survey showed on Wednesday.

A block in Tokyo's Ginza district containing the posh Kyukyodo stationery shop rose 14 percent last year to 27 million yen a square metre ($21,000 a square foot), the highest for any plot in Japan since 1993, the survey by the National Tax Agency showed.

But average land prices nationwide slipped for the seventh consecutive year, in contrast to Japan's asset inflated bubble that started in the late 1980s when land prices nationwide were boosted by speculative investments.

"Early indications of a bubble are strengthening" in the most expensive areas," said Takashi Ishizawa, senior analyst at Mizuho Securities.

"On the other hand, regions with falling populations likely won't see their land prices rising again. Tokyo is growing at the expense of the declining regional economies."

Land prices in Tokyo could rise further as foreign investors with plentiful capital keep looking for investment opportunities in the nation's capital while borrowing costs are low.

Japan's market is already crowded with large foreign investors such as U.S. buyout firm Blackstone Group and Singapore's sovereign wealth fund GIC Pte.

Norges Bank Investment Management, which manages the world's largest sovereign wealth fund, also plans to open an office in Tokyo to seek real estate investment opportunities, a sign that more money is coming to Japan.

The tax agency assesses land prices as of Jan. 1 every year to calculate inheritance and gift taxes on properties acquired that year.

Land prices fell in 35 of Japan's 47 prefectures, but the biggest cities continued to rise while areas devastated by the 2011 earthquake and tsunami maintained their rebound.

Quake-hit Miyagi prefecture in the northeast rose 2.5 percent, while neighbouring Fukushima prefecture was up 2.3 percent.

Tokyo land prices rose 2.1 percent, while Aichi prefecture, which includes the city of Nagoya, posted a 1.0 percent gain. Land prices in Osaka rose 0.5 percent.

The average land price nationwide for tax purposes slipped 0.4 percent, narrowing from the previous year's 0.7 percent decline, the survey found.

($1 = 122.8600 yen) (Editing by William Mallard and Jacqueline Wong)