I can see you wanted to blame Democrats when you brought up "massive restrictions on development", but it doesn't wash. If red tape sapped a significant amount of value from housing, why would people consider it the best investment vehicle around?

I didn't blame Democrats specifically, although its understandable how one could leap to that conclusion. I'm sure there are Republicans out there somewhere who advocate massive restrictions on land use, new building, development, new infrastructure, and the "prevention of sprawl."

You missed the point. Restrictions on development, i.e. building homes, don't sap the value from existing housing. Just the opposite. It makes housing more expensive. Where I live, when someone gets rid of an old house on a big lot, developers pile in and build as many tiny little costly houses on it as the lot and zoning law permits. Land is that hard to come by on the Peninsula. Being surrounded by water doesn't help, but having a huge chunk of the peninsula dedicated to "nature" makes it even more expensive.

Of COURSE something kept deliberately low in supply will be a good investment. See also: diamonds.

Note that I didn't put a value judgment on this sequestered land. Most people no doubt feel that the better environment is worth the higher prices. But the high prices are still there.

There is a report on family finances here.

I haven't gone over it in detail, but it seems like between 60 and 65 percent of assets are held in non-financial things like real estate (table 7). Table 4 shows financial assets. The ratio hasn't changed all that much (except for a spike in stock holdings) since 1995. Would like to see numbers further back.

This paper has a lot of other useful information, and is worth bookmarking.

Again, Japan's cost of living is enormous, but it has been competitive. It can't be an insurmountable barrier.