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6.8 years of income for a Japanese family to buy a house hinders childbirth

The rising price of housing in Japan and the small size of homes are dampening people’s desire to have children. When asked about the reasons for not wanting to have the desired number of children, more than 20% of Japanese millennials answered “because of the small size of their homes”. Some analysts believe that the small size of homes and long commute times are discouraging the birth of a second child. In order for Prime Minister Fumio Kishida’s “next-generation different” measures to reduce the number of children to be effective, they need to be combined with housing policies such as the use of unused housing.

According to the Japan Real Estate and Economic Research Institute (Shinjuku-ku, Tokyo), the average price of a new home in Tokyo in 2022 will be 62,880,000 yen (about 3,282,300 yuan), a record high for the second year in a row. House prices rose 0.4% from the previous year, although the increase was smaller, but the average unit size fell 1% to 66.1 square meters, shrinking 6% from 10 years ago. This is generally the area of 2LDK (two rooms, two bathrooms and one kitchen). Real estate agencies in Tokyo said, “The number of homes with floor plans suitable for multi-child families is decreasing.”

“De facto price increase”

Shu Nagashima, president of the housing consultancy Sakura & Associates (Shibuya-ku, Tokyo), pointed out that “the ‘de facto price increase’ that shrinks in size and makes the apparent price increase seem slow has increased.”

According to the East Japan Real Estate Agency, the average size of second-hand houses in the Tokyo area that will be under contract in 2022 is 63.59 square meters. Even in the Kinki area (including Osaka Prefecture, Kyoto Prefecture, Hyogo Prefecture, etc.), the tendency to increase residential prices and reduce the size of homes is prominent. The Ministry of Internal Affairs and Communications’ Housing and Land Statistics Survey shows that about 60% of homes have a total usable area of 49 square meters or less.

According to the Japanese government’s standard of living area for “affluent living,” a three-person household consisting of a couple and children aged 3 to 5 in an urban area is 65 square meters. It is difficult to secure a comfortable home for families with more than two children.

According to the Basic Survey on Birth Trends in 2021 conducted by the National Institute for Social Security and Population Studies, 21.4% of the younger generation (with wives under 35 years old) are “because of the small size of their homes” among the reasons for not wanting to have the desired number of children. The proportion of those who do not want to have the desired number of children is 21.4%. This proportion was about 18 to 19% in the 2002-2015 survey.

According to a study conducted by the Ministry of Finance of Japan in 2021, the smaller the residence at the time of the birth of the first child, the more the number of births of the second child is discouraged. If one moves to the suburbs, residential spending will decline. However, the study also shows that in urban areas, the number of 2nd child births will decrease by 4% if the commute of spouses is extended by 10 minutes.

Isao Naito, a research officer at Japan’s Ministry of Finance, said that “increasing rental subsidies and housing subsidies for companies and building corporate employee dormitories and public housing in central areas of cities is very effective in targeting young child-rearing families and other targets.”

A woman in her 40s from a dual-income family and working in Tokyo’s metropolitan center bought a second home in Chuo-ku, Tokyo in 2021, taking into account commuting time. It is 55 square meters in size and is in a 2LDK layout, with three people living together, husband and wife and children. She said, “I have decided not to have 2 children. If I add 1 room, I need to add 20 million yen”.

Conversion of unused rooms becomes one of the countermeasures

In order to solve the problem, it is necessary to strengthen the coordination between the countermeasure of childlessness and housing policy. France, which has a high birth rate in the European Union (EU), provides housing subsidies to families with children based on income, etc. In Japan, there are about 8.49 million unused houses, and there is a trend in some areas to renovate and rent them to child-rearing families.

Japanese Prime Minister Fumio Kishida said at the House of Representatives Budget Committee meeting on January 31 that “measures to raise the wages of young people and increase the supply of housing are very important factors in realizing the desire to have children after marriage,” and expressed his intention to expand housing support for young couples about to get married and for families raising children. The Japanese Minister of Land, Infrastructure, Transport and Tourism, Tetsuto Saito, also said on the 30th that he would discuss a mechanism that would allow families with children to have priority in public housing.

However, economic factors, which are the main cause of fewer children, are causing the willingness of Japan’s younger generation to want to have children to wane. Efforts to raise the income of the younger generation through measures such as salary increases are even more indispensable to create an environment in which young people feel comfortable getting married and having children.

In Japan, even dual-income families with a certain income have difficulty escaping the high price and small size of their homes. Looking at the house price to income ratio (which shows how many times the purchase price of a home reaches the annual household income), Japan’s ratio reaches 6.83 times as of 2021, which appears to be high among developed countries. Although the years surveyed differ, the ratio is 5.07 times in the U.S., 5.16 times in the U.K., and 6.14 times in France. Japan is also at the lowest level in terms of usable area per house.

Research on residential spending and birth rates is advancing globally. In a 2014 paper, economists at the U.S. Federal Reserve Board (FRB) and others analyzed that “the birth rate for households without a home would fall by 2.4 percent if the price of a home rose by $10,000.” The same study is being conducted in the UK.