Why Japan is one of the only countries that isn’t fed up with housing costs

Housing stood out as the topic where respondents were the most frustrated, according to a Financial Times analysis. The Gallup data shows that in 24 of the 38 countries, respondents were more likely to be dissatisfied than satisfied with the quality and cost of housing.

Israel, Turkey, Slovenia, and Portugal ranked last in housing satisfaction. The United States was tied for No. 21, with 39% of the more than 1,000 respondents saying they were satisfied, down from 61% in 2020 and 71% in 2013.

The only country in which more than 70% of respondents were satisfied with the availability of “good, affordable housing” was Japan.

In recent years, rising rents and home prices driven by a severe housing shortage — coupled with elevated mortgage rates — have caused Americans’ housing costs to soar to near-record levels of unaffordability. In response, politicians have pointed to various solutions for bringing down housing costs, including building more homes, cracking down on abusive landlords who use algorithms to collude with each other to jack up the rent, and aiding first-time homebuyers.

To be sure, solving a decades-old housing shortage will take a multi-pronged approach, experts say, including cutting red tape that limits construction.

Some experts have pointed to Japan, where housing costs are lower than peer countries, as a potential model for solutions the US could adopt. While Japan’s abundance of housing isn’t entirely a positive story, when it comes to Tokyo, housing experts say there are many lessons the US could learn from its ally.

Why Japan doesn’t have as severe of a housing crisis as the US

Japan is something of an outlier when it comes to housing affordability for a few major reasons: population decline and deregulated, standardized land-use policies.

Japan’s low birthrates and restrictive immigration policies mean its population has been shrinking for decades, which has left about 10 million homes vacant across the country. That falling demand, of course, means lower home prices and rents. At the same time, the country’s population is becoming even more concentrated in its big cities. Many small towns and villages are at risk of becoming abandoned ghost towns.

Tokyo is the exception. The city’s metro area is home to about a third of Japan’s population, and it’s growing. But the megacity has managed to keep housing quite affordable, as Business Insider reported last year, in part by consistently building a ton of new housing.

Unlike many other industrialized countries, Japan’s national government controls its land-use laws. This means zoning regulations and other rules that determine what gets built where are relatively simple, consistent, and not subject to much community pushback. Because local elected officials don’t have control over zoning, they can’t be swayed by their constituents’ NIMBYism — the anti-development “Not In My Backyard” thinking — which so often stifles development in the US.

Those uniform, national zoning regulations tend to allow for more mixed-use neighborhoods, denser and more multi-family housing, along with faster and cheaper construction. Additionally, developers aren’t held back by burdensome regulatory processes that slow down construction and inflate costs. It helps that most Tokyo residents don’t own cars, so parking doesn’t increase the price of housing as much as it does in the US.

Japan’s penchant for building is also born of necessity. The country is particularly vulnerable to earthquakes, which means that newer homes that abide by safer building codes are more attractive. While American homes tend to appreciate over time and are thus seen as key investments, Japanese homes tend to depreciate as they age and become non-compliant with building codes. This means Japanese homeowners aren’t as invested in keeping supply low and home prices high.

So what, if anything, might the US learn from Japan?

Birthrates in the US have steadily declined over the past two decades, and unless immigration makes up the gap, the country’s population could grow more slowly in the decades to come and potentially decline later this century.

While a population slowdown could help moderate housing costs, some experts believe a substantial population decline would have big economic consequences in the long run. A significant drop in immigration would also hurt the housing sector, economists say, as immigrants make up a disproportionate number of US construction workers.

But the US could learn a lot from Tokyo’s approach to building. While housing policy is largely controlled by states and local governments in the US, housing experts say the federal government should do more to incentivize construction, while simultaneously subsidizing lower-income renters and homebuyers. And American states and cities could adopt looser land-use laws that facilitate the kind of rapid home construction they desperately need.

Are you struggling to afford a home? Are you willing to share your story? Reach out to these reporters at jzinkula@businessinsider.com and erelman@businessinsider.com.