Baby-boomers, Baby-busters and the Lost Generation: Generational ...

Urban Policy and Research, Vol. 26, No. 3, 325–342, September 2008

Baby-boomers, Baby-busters and the Lost Generation: Generational Fractures in Japan’s Homeowner Society YOSUKE HIRAYAMA* & RICHARD RONALD** *Graduate School of Human Development and Environment, Kobe University, Kobe, Japan **OTB Research Institute, Delft University of Technology, Delft, the Netherlands

ABSTRACT Over the past two decades housing pathways have become increasingly differentiated between generations, particularly in advanced societies dominated by owner-occupied tenure systems. Demographic transformations caused by aging and falling fertility rates, along with a more volatile economy and a neo-liberal reorientation of governance have combined to restructure housing conditions. Drawing on empirical research in Japan, this paper illustrates the social origins and impact of generation-based differentiations in housing patterns in that country. It considers the housing experiences of three cohorts: baby-boomers, baby-busters and the ‘lost generation’. The contrast of housing pathways between these generations in Japan illustrates the contemporary dynamics of housing and social processes in homeowner societies.

KEY WORDS: Home ownership, housing experience, generational fractures, Japan

Introduction In post-war Japan, the promotion of home ownership played a pivotal role in enhancing social integration. During the period of rapid economic development, the state-guided housing system drove the formation of a social mainstream by expanding middle-class home ownership (see Waswo, 2002; Hirayama, 2003; Ronald, 2004). Since home ownership provided secure homes and an efficient means of asset accumulation, the majority of people oriented themselves around the expectation of eventually becoming homeowners. The aggregated flow of households climbing up the housing ladder towards property ownership attainment generated a clear social direction (Hirayama, 2007). Over recent decades, however, housing conditions across different generations have become increasingly Correspondence Address: Yosuke Hirayama, Graduate School of Human Development and Environment, Kobe University, Nada, Kobe 657-8501, Japan. Tel./Fax: þ81 78 803 7771; Email: [email protected] 0811-1146 Print/1476-7244 Online/08/030325-18 q 2008 Editorial Board, Urban Policy and Research DOI: 10.1080/08111140802301773

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differentiated. The combination of a more volatile economy and the retreat of the government from housing subsidy provision have served to restructure the environment of home ownership, leading to declining effectiveness in the housing ladder system. It is now apparent that younger generations are not following the life-courses of their elders. As the generation-based unevenness of housing opportunities has been amplified, the order of home-ownership-based social integration has thus become destabilised. This paper, by focusing on the Japanese case, seeks to demonstrate the importance of generational fractures in understanding current socio-economic transformations. It explores, specifically, the housing experiences of three cohorts: baby-boomers, babybusters and the ‘lost generation’.1 According to the Population Census in 2005, baby-boomers accounted for 7.6 per cent of the total population, baby-busters 6.3 per cent and the ‘lost generation’ 14.4 per cent. In post-war Japan, the economy developed at a striking pace until the early 1970s when the first oil crisis took place. The average rate of GDP growth from the middle of the 1950s to the end of the 1960s was as high as 10 per cent. Although the era of high-speed economic growth ended in the early 1970s, Japan’s relatively strong economic performance was maintained with the average GDP growth rate at 5 per cent in the 1970s and at 4 per cent in the 1980s. The ‘bubble economy’, which expanded in the last half of the 1980s with the abnormal rise of housing and land prices, collapsed at the beginning of the 1990s. The economic bubble noticeably amplified the volatility of the housing market. In the Tokyo metropolitan area, the average price-to-income ratio for a condominium rose from 4.2 times in 1985 to 8.0 times in 1990, and then dropped to 4.7 times in 1998 (MLIT, 2006). After the bubble burst, Japan entered a long period of severe economic recession and the 1990s came to be referred to as Japan’s ‘lost decade’. The average GDP growth rate during the 1990s was less than 2 per cent while the unemployment rate, which had been maintained at a very low level, rose to a record high of 5.4 per cent in 2002. Japan’s economy eventually began to recover from the middle of the 2000s. However, the current economy is far from being as strong as it was in the past. The economic trajectory of post-war Japan is clearly paralleled by differentiations in housing pathways between generations. While many baby-boomers moved up the housing ladder towards home ownership and accumulated housing assets during the rapid economic development period, baby-busters were more affected by the rise and fall of the bubble economy and have experienced unprecedented drops in the values of their homes. The younger generation, or the ‘lost generation’, entered the labour force during the 1990s post-bubble era of deep and enduring recession. Consequently, their prospects of housing and home ownership have become characteristically insecure. The stark contrast of experiences between these cohorts provides an insight into the contemporary housing dynamics of Japanese society. This paper analyses the housing trajectories of different generations with particular reference to transformations in the welfare system. The profile of Japan’s welfare mix has been characterised by small-scale state welfare provision and an explicit reliance on corporate-based welfare, reciprocal welfare within families and the private ownership of housing (Hirayama & Ronald, 2007; Osawa, 2007). Individual membership of mainstream society has also been defined by a combination of occupational status, marriage and family formation, and housing asset accumulation (Hirayama, 2003). Home ownership, along with reliance on family and employment, has indeed been crucial to the provision of social and economic stability, and has been a substitute for state welfare provision. Nonetheless, there

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have been rapid changes in socio-economic and policy circumstances in the last 20 years. Housing, family and employment conditions have become increasingly volatile as well as significantly differentiated between baby-boomers, baby-busters and the ‘lost generation’. Japan constitutes one of the most mature home-owning societies among industrial and post-industrial societies with concerted owner-occupied sector development. However, it has recently been undergoing radical changes in the organisation of home ownership and generational differences can be clearly observed (Hirayama & Ronald, 2007). The insights that can be gleaned from the Japanese experience contribute to the understanding of new phases in the development of homeowner societies more generally. This paper begins by outlining the social and theoretical significance of housing and home ownership as well as the salience of the Japanese situation before providing an analytical framework of key drivers of generational differentiation in Japanese housing experiences. It moves on to highlight the differentials of housing trajectories between baby-boomers and baby-busters, drawing on data from our survey conducted on urban middle-class households in 2006. Finally, the paper explores the housing situation of the ‘lost generation’. The Impact of Home Ownership The orientation of some countries toward home ownership has been associated with the structure of welfare provision as well as the nature of economic and political relations (Doling & Ford, 2003; Groves et al., 2007; Ronald, 2007). As the features of home ownership systems are differentiated between countries, tenure policies and approaches have had significant social outcomes and have shaped patterns of development. In many Western societies with liberal welfare regimes, the expansion of home ownership has corresponded with welfare state rollback and neo-liberal restructuring of risk and governance (Ronald, 2008). Critical periods of increased access to owner-occupation and episodes of house price inflation have combined to structure a pattern of mass home ownership among older generations who have enjoyed relatively secure employment, the post-war expansion of state welfare safety-nets and the augmentation of their property asset values. Younger generations meanwhile, have experienced a greater proliferation of risks in employment and welfare as well as increasing exclusion from the owner-occupied housing market. Similar features have been evident in many industrialised East Asian societies that also demonstrate a prolonged orientation towards owner-occupied housing provision and even greater reliance on housing assets in building welfare security (Chua, 1997; Lee, 1999; Agus et al., 2002). An emergent feature of the East Asian group has thus been the influence of the housing system in structuring or enhancing social inequities across tenure and market sector divisions as well as between generations. As Groves et al. (2007) observe, home ownership systems in these contexts play an important role in steering social transformations and setting the trajectory of social and economic development. Japan’s homeowner society is the most mature amongst this group and, at the same time, has arguably come under greatest pressure as a result of the radical transformations of the post-bubble period. The cracks evident between different types of tenure and owneroccupied market sector and between different generations in Japan have thus been more pronounced, providing an acute case for reference by other homeowner societies. In particular, there may be clear lessons from Japan for understanding the changing origins and character of social inequalities and how welfare strategies and neo-liberalisation of markets impact upon individuals and households through the housing system.

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There are also considerations relating to the long-term socio-demographic effects of housing systems. Family formation and fertility rates in particular have been associated with the structure of housing systems (Mulder, 2006), and in Western societies, marriage and parenthood have been strongly linked to the transition to first-time home ownership. However, high costs or other housing market difficulties can significantly impede partnership formation and parenthood, leading to very low fertility, especially in countries oriented towards home ownership (Courgeau & Lelie`vre, 1992). Consequently, the gaps generated by the maturation of home ownership systems associated with policy deregulation and increasing market volatility may have more substantial social outcomes. Housing trajectory fractures between generations may well contribute to long-term population decline and demographic distortions, with growing numbers of older dependent households with substantial housing assets and declining numbers of young households who are increasingly excluded from the owner-occupied property ladder. Again, Japan appears to be at the leading edge of the curve, with divergent housing courses and experiences between generations constituting a critical dimension of social change that may be more universally relevant to understanding contemporary social developments.

Key Drivers for Differentiation Housing Market Volatility Mechanisms of housing trajectory differentiation have been complex where social, demographic, economic, institutional and policy transformations have been interconnected with each other. Specific elements in understanding generational fractures in the context of Japan’s homeowner society are: housing market volatility; labour market reorganisation; changes in family formation; intergenerational relations; and the reorientation of housing policy. Housing market volatility in economic terms has strongly differentiated the conditions of home ownership between cohort groups. In Japan the rise and fall of the economic bubble played a key part in reshaping housing conditions (Hirayama & Ronald, 2007). Until the bubble burst at the beginning of the 1990s, the system framework of home ownership expansion was closely intertwined with the inflationary economy. Since the prices of land and housing rose continuously and rapidly, owning a house generated considerable capital gains and was a primary mechanism of asset accumulation. However, the bursting of the bubble marked a turning point and Japan entered a long period of deep recession. The overall economy became deflationary and the real prices of land and housing dropped sharply. Since owneroccupied housing began generating capital losses, there has been a notable increase in homeowners trapped in negative equity. In addition, real income deflation was translated into a dramatic increase in mortgage defaults. The security of residential property as an asset and the sustainability of home ownership have become severely challenged. The timing of entry into the owner-occupied housing market has become crucial in determining the fortunes of household economic conditions. In terms of asset accumulation and mortgage burden, a sharp contrast has been created between cohorts who entered the home ownership market before the bubble and cohorts who purchased during the height of the bubble.


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Labour Market Reorganisation Peculiar to Japan’s welfare mix is that the corporate sector has played a significant role in welfare provision. The post-war welfare state supported employment security and corporate-based welfare provision with regulatory and tax incentive measures in order to avoid expanding the direct provision of public welfare. Japanese society has often been referred to as a ‘company society’ where many companies adopt a lifelong employment system and a seniority system for wages and promotion, forming a model of ‘company as a family’. Within the framework of the company society, the corporate sector has provided employees with a range of occupational welfare, including housing welfare (Sato, 2007). Major corporations have implemented in-house systems to support their employees in securing housing, which has been an embedded part of the housing ladder. Employee housing and rental subsidies were supplied for young employees, while employees in later stages of the housing ladder had access to a company loan system for home purchase. Lifelong employment and seniority systems enabled employees to assume a steady increase in income and consequently substantial financial stability in housing purchases. Since the 1990s, however, company society has been fundamentally weakened by the prolonged recession, resulting in substantial casualisation of the labour market (MHLW, 2006). In the context of an increasingly competitive business environment, the labour market has been reoriented towards short-term contracts, part-time workers and temporary employees. The government, which formerly protected employment security, began to support labour market casualisation in response to political pressure from business circles. An increasing number of corporations have abandoned the conventional system of lifelong employment and introduced a performance-based system to replace the seniority system. Thus while older generations entered the labour force when lifelong employment was the norm, younger people have been seriously affected by employment casualisation. In parallel with the decline in the ‘company as a family’ model, many corporations have begun to unload employee-housing properties and to discontinue in-house housing systems as well as other employee benefit programs. Consequently, it seems now unlikely that younger employees will benefit from company housing benefits (Sato, 2007), signifying a fundamental fracture across generations.

Changes in Family Formation The Japanese housing ladder system was created on the premise that the vast majority of people lead ‘standard life-courses’. The accelerated post-war formation of nuclear families constituted a normalised model of the ‘standard household’ or ‘male-breadwinner household’. Japan’s welfare system was rigidly aligned with this singular model, which focused on the protection of conventional family households (Hirayama & Izuhara, 2008). This was assumed to reduce the need for social spending or the expansion of universal benefits. Housing policy measures concentrated on helping nuclear households to attain home ownership while the systems of pension provision and income taxation also advantaged male-breadwinner households. Moreover, corporate-based welfare including family allowance, employee housing and low-interest loans for housing purchase has been provided mainly for male employees with family members. In other words, non-married people or single-person households have been specifically disadvantaged by the welfare

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system. This distributive pattern of welfare oriented the vast majority around standardised life-courses and conventional households. However, household formation and life-courses have rapidly diversified in recent years due to a rising marriage age, falling fertility rates and increasing longevity. According to the Population Census, the proportion of nuclear households (married couple and children) dropped from 40.0 per cent in 1985 to 34.2 per cent in 1995 and to 29.9 per cent in 2005. Consequently, housing trajectories have become increasingly differentiated between younger and older generations. There has been an apparent tendency of the young generation to delay getting on the housing ladder, largely due to the postponement of marriage and family formation. A decline in conventional households also means an inevitable increase in people disadvantaged in terms of the system of welfare benefits. Intergenerational Relations In mature homeowner societies like Japan, where a huge amount of family housing wealth has accumulated, the role played by intergenerational relations has become increasingly significant in housing and social processes (Hirayama & Hayakawa, 1995; Izuhara, 2005). While on the one hand, younger generations have experienced a more sluggish economy and faced difficulties in finding stable employment and ascending the property ladder, on the other, an increasing number of young people are expected to inherit the housing assets of their parent’s generation. Indeed, a high rate of home ownership among older generations combined with decreasing fertility has meant increasing possibilities for the next generation to inherit residential properties (Hirayama & Hayakawa, 1995). It should be noted that the offspring generation is not likely to inherit housing property until they are considerably older due to expanding longevity, which delays property succession. Housing inheritance therefore has limited influence on the first-time housing purchase of offspring households. Also, the location of inherited homes is not necessarily desirable to inheritor households. Nevertheless, parental property assets eventually add to those of their offspring. Moreover, parents sometimes provide their children with financial support for purchasing a house. In the context of the post-bubble recession, the government has promoted inter vivos asset transfer by means of tax incentive provision (Ide, 2004). Intergenerational relations are a new factor in the reorganisation of social inequalities relating to housing wealth (Hirayama, 2007). Housing and asset conditions of younger generations in the future will be partly determined by: whether or not their parents own a house; whether they can inherit it or not; and whether or not they can obtain financial support from parents when purchasing a home. Those with relatively high incomes tend to have better prospects of housing inheritance while most low-income renters have little possibility of inheriting residential property. In other words, social inequalities in terms of housing across a generation tend to be hereditary. Reorientation of Housing Policy Japan’s welfare system has consistently relied on the private ownership of housing and individual asset accumulation for family security. This has been assumed to be effective in substituting for minimal expansion of state welfare (Hirayama & Hayakawa, 1995). The outright owners of a house not only maintain a property asset but also enjoy minimal housing costs after completing mortgage repayments, which can be a deterrent to a high


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level of social security. The trade-off between home ownership and pension provision has been widely debated in the context of Western welfare states (Castles, 1998; Fahey, 2003; Kemeny, 2005). In Japan where the housing system has been focused almost exclusively around the expansion of the home ownership sector since the immediate post-war period, the trade-off relationship between state welfare and home ownership has long been regarded as an important element in accounting for the growth of owner-occupation. The government has systematised housing policy in order to take the initiative in promulgating a home-ownership-oriented housing system. The Government Housing Loan Corporation (GHLC) was established as a state agency in 1951 to provide middle-class households with long-term, low-interest mortgages for the acquisition or construction of their own homes. Among housing policy measures, the provision of GHLC mortgages was particularly emphasised in developing the owner-occupied sector while direct provision of public rental housing was marginalised. The Japanese government thus characteristically operated a tenure discriminatory housing system and nurtured the creation of a home-ownership-based welfare system. In the mid-1990s, however, as the fiscal condition of the public sector deteriorated to a crisis level, largely due to the long recession, the government retreated from housing subsidy programs and subsequently began to move towards accentuating the role of the market in providing and financing housing (Hirayama & Ronald, 2007). The GHLC, the central pillar of the post-war housing system, was dissolved in March 2007, signifying a substantial and historic shift in Japanese housing policy. The new corporate body that replaced the GHLC, the Housing Finance Agency, has retreated from the primary mortgage market and will subsequently deal only with the secondary market of mortgage securities. The extent to which the government guides the housing system is thus in decline, while housing provision by market mechanisms is expanding. Consequently, unlike the older generation households who effectively utilised state subsidies via GHLC low-interest loans to acquire their own home, younger generation households who wish to become homeowners will not be able to benefit from state subsidy provision.

Housing Experiences of Baby-boomers and Baby-busters Method and Approach We now turn to our empirical findings concerning generational schisms between urban middle-class households. Specifically, differences in housing experiences were analysed between baby-boomers and baby-busters. Middle-class people have largely led a ‘standardised life-course’ in terms of household formation and obtaining secure employment. However, there have been clear differences in housing pathways between these two cohorts particularly in terms of housing market volatility. Our survey in 2006 addressed the housing trajectories of male graduates from the Faculties of Economics, Business Administration, Law and Engineering at Kobe University who currently live in Japan’s two largest metropolitan areas: Tokyo and Osaka. Since the formation of Japanese households has been primarily oriented around the ‘malebreadwinner’ model, it was necessary to focus on male householders in analysing housing situations at the household level. The intention of the survey was not to look at the housing situations of all social classes, but to obtain a clearer picture of generational differences in housing experiences within middle-class groups. It is reasonable to assume that male

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graduates from that university, a top-class national university in Japan, were mostly middle class and embedded in the social mainstream. In the survey, baby-boomers were defined as those who were born between April 1945 and March 1950 (56 –60 years old as of March 2006), and baby-busters as those who were born between April 1957 and March 1962 (44 – 48 years old as of March 2006). These two cohorts, though different in birth year only by 8– 12 years, have been following significantly different housing trajectories, reflecting rapid changes in housing circumstances in Japan. The survey questionnaire was mainly concerned with the respondents’ retrospective housing experiences. From a randomly selected sample of 2505, 862 replied to the postal questionnaire (243 babyboomers and 185 baby-busters in Tokyo, and 283 baby-boomers and 151 baby-busters in Osaka: 34.4 per cent response rate). Most respondents are core members of Japan’s company society, and work for major private corporations. The rate of those employed by the private corporate sector is 79.3 per cent for baby-boomers and 83.8 per cent for baby-busters. Their employment status is high—the rate of those in managerial occupations is 72.8 per cent for baby-boomers and 68.8 per cent for baby-busters. The average size of the respondents’ companies is smaller in the case of baby-boomers compared with that of baby-busters. This is because the babyboomers, that are approaching retirement, have started to be transferred to smaller affiliated companies, following traditional employment practices in Japanese corporations (Higuchi, 2004). Climbing up the Housing Ladder What kind of life-courses have these respondents followed? As Figure 1 shows, the household form of many respondents changed from a one-person household to a married couple only household, and to a household of a married couple and children, supporting the assertion that middle-class people formed a standard household and followed a regular life-course. The pattern of change in household form, however, differs between generations. Baby-busters were more likely to have married and had children at a later age than baby-boomers. The delay in marriage has become a general tendency in Japan, which is reflected in the survey results. The proportion of the baby-boomers and baby-busters

Figure 1. Changes in household type


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who formed a household of a married couple and children was 53.7 and 40.0 per cent at the age of 30, and 78.6 and 67.3 per cent, respectively, at the age of 35. Most households climbed up the housing ladder towards home ownership. By the time of the survey, 89.5 per cent of the baby-boomer respondents and 79.0 per cent of the babybuster respondents had become owner-occupiers. However, the process of becoming a homeowner was differentiated between cohorts (see Figure 2). In Japan’s company society the corporate sector supported young employees in getting a foothold on the housing ladder by providing them with low-rent employee housing. Since most respondents are employees of major companies, the rate of those living in employee rental housing at the age of 25 was notably high at 47.2 per cent for baby-boomers and 58.9 per cent for babybusters. In the 1980s, when the baby-busters began to enter the labour market, enterprises were seeking to secure a younger labour force through the provision of employee housing, as there was a shortage in the workforce and rents for private rental housing in urban areas were rising. Accordingly, more baby-busters, compared with baby-boomers, have lived in employee rental housing. Young households used such employee housing as a steppingstone to enter the home ownership market. As the respondents aged, the level of home ownership rose. However, baby-busters became homeowners at notably later ages than the baby-boomers. The level of home ownership at the age of 35 (including detached houses and condominiums) was 40.7 per cent for the baby-busters and 54.2 per cent for the baby-boomers. Underlying this difference is the fact that the baby-busters formed households at a later age and that housing prices had risen even higher by the time baby-busters began to purchase dwellings. Home ownership in Japan normally involves the ownership of either a singlefamily house or a condominium, with the former located on the top of the housing ladder. Baby-boomers are more likely to live in a single-family home and baby-busters in a condominium. The rate of ownership of either a single-family house or a condominium at the age of 40 was 42.7 and 22.5 per cent for the baby-boomer respondents, and 28.9 and 28.3 per cent for the baby-busters, respectively. This is because single-family housing had become less affordable for the baby-buster generation.

Figure 2. Changes in housing tenure

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Differentiated Impacts of Housing Asset Deflation The extent of the impact caused by the economic bubble on the asset value of owner-occupied housing was noticeably differentiated between generations. In Japan, middle-class people tend to purchase a house in their early 30s, meaning that many baby-boomers entered the home ownership market from the late 1970s to the early 1980s (before the economic bubble), while many baby-busters entered this market between the late 1980s and the early 1990s (during the bubble peak). According to the survey data (see Table 1), 53.1 per cent of the babyboomer respondents experienced both rises and drops in the market value of their housing properties. The baby-boomer generation households, who purchased a dwelling before the bubble, experienced appreciation in the value of their properties in line with bubble expansion, followed by post-bubble property depreciation. Unlike the baby-boomers, 51.2 per cent of the baby-buster respondents experienced only drops in the value of their housing properties. During the peak bubble years, the rate of housing price inflation hurried baby-busters into home purchase. They were subsequently confronted with the collapse of the bubble and tremendous property price devaluation. Moreover, the burden of mortgage repayments has been heavier for baby-busters than for baby-boomers. This is because baby-busters purchased houses during the price peak of the bubble era, and because the post-bubble deflation worsened repayment conditions of mortgages. Of the homeowner respondents, the rate of outright homeowners and that of mortgaged house owners are greatly differentiated between these two cohorts: 74.3 and 25.7 per cent for the baby-boomers, and 27.2 and 72.8 per cent for the baby-busters, respectively. Many baby-busters in particular are continuing to repay hefty loans on properties whose value has declined. The extent of housing devaluation has been strongly differentiated between different types of dwellings (for a full discussion, see Hirayama, 2005; Ronald & Hirayama, 2006). The fall in property value has been greater among second-hand housing than for newly built housing, and for condominiums rather than for single-family dwellings. In other words, the depreciation of second-hand condominiums has been marked, and the scale of capital losses generated on condominium properties has been substantial. This means that the baby-buster cohort, that includes more condominium owners, was more greatly affected by housing asset deflation compared with the baby-boomer cohort, made up of more single-family housing owners. The rise and fall of the bubble caused tremendous fluctuations in housing prices. It is, however, not only the economic bubble but also the moves of the baby-boomer generation households up the housing ladder that stimulated volatility in the housing market. Many baby-boomers entered the home ownership market in the early 1980s, producing a considerable ‘positive demand’ for dwellings, which in part triggered the subsequent rise Table 1. Respondents’ experiences of changes in the value of their housing properties

Rise Fall Both rise and fall Neither rise nor fall I don’t know I’ve never owned any housing properties

Baby-boomer (N ¼ 518)

Baby-buster (N ¼ 322)

18.5% 18.9% 53.1% 6.8% 2.5% 0.2%

4.7% 51.2% 15.8% 17.7% 10.2% 0.3%


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in house prices. By the early 1990s, many baby-boomers had become homeowners and prices began to drop. Essentially, the satiation of baby-boomer home ownership demand led to a growing ‘negative demand’ in the owner-occupied housing market (Miyake, 1996). The baby-buster generation, following the baby-boomer generation, was thus pressed into purchasing houses at higher prices, resulting from the market boom brought on by the baby-boomers, and then experienced rapid devaluation of their housing properties in the post-bubble climate. It is also important to note that the baby-boom period in Japan was short-lived, lasting for only three years from 1947 to 1949, while it often continued for a decade or more in Western nations (Matsutani, 2004). This is because anti-fertility legislation was introduced in 1948 to control birth rates, which was expected to improve the conditions of those in extreme poverty following the war. The implication is that the Japanese baby-boomer generation generated a ‘positive demand’ and, subsequently, a ‘negative demand’ in a short period, which amplified the volatility in the housing market. Housing Inheritance and Multiple-Property Ownership Intergenerational relations with regard to housing are different between baby-boomers and baby-busters. Compared with baby-boomers, baby-busters have fewer siblings, and the home ownership rate of their parents is higher. The possibility of housing inheritance is accordingly higher for baby-busters than for baby-boomers (see Figure 3). The proportion of those who responded “I have inherited a dwelling” (either living in this house or not) is 25.1 per cent among baby-boomer respondents, compared to 13.7 per cent among

Figure 3. Inheritance of housing properties

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baby-busters. This is because housing inheritance is more likely when the heir is considerably older. However, the rate of those who said “I will inherit a house” is much higher for the baby-busters (either living in this house or not) at 65.0 per cent than for the baby-boomers at 29.9 per cent. Although many baby-busters are likely to inherit their parents’ homes eventually, they have tended to purchase their own housing without waiting for inheritance and subsequently inherit their parents’ house later (due to increased longevity and thus the postponement of housing succession). Therefore, there is less possibility that baby-busters will live in the houses they eventually inherit. Among the baby-buster respondents, only 7.3 per cent said “I will inherit a house and plan to live there”. A new trend in the housing sphere has been an increase in multiple-property owners who own one or more dwellings beside the home they live in. According to our survey, multiple-property owners account for 24.2 per cent of all respondents. Of all secondary dwellings, 39.9 per cent are rented out and 28.2 per cent are occupied by the owner’s relatives. The increase in housing inheritance is likely to facilitate the increase of multiple-property owners. The rate of multiple-property owners is much higher for those who have inherited a dwelling (49.1 per cent) than for others (18.5 per cent). There are more multiple-property owners among baby-boomers (28.0 per cent) than baby-busters (18.1 per cent) because the proportion of those who have already inherited housing is higher among the baby-boomers. In Japan’s mature home-owning society, the distributive pattern of housing wealth is becoming central in reshaping the housing system. Compared with the baby-boomer generation, the baby-buster generation has been disadvantaged in terms of economic home ownership conditions, but they are more likely to inherit parents’ housing. The probability of becoming multiple-property owners for baby-busters is also considerably high. This does not mean that most baby-buster generation households will benefit from housing succession. The survey respondents are middle class and their parents are assumed to be relatively wealthy. There are many low-income households whose parents are also lowincome. While there will be an increasing number of families accumulating housing wealth over generations, low-income renters who have little possibility of property succession will continue to be excluded from the homeowner society. Housing Conditions of the Lost Generation The naming of the generation who were born in the 1970s as the ‘lost generation’ reflects the fact that they have experienced unprecedented difficulties in obtaining stable employment, in forming independent families and in entering the home ownership market. The erosion of the traditional welfare system combined with the shift of government policies towards deregulating the housing market and employment provision has led to the destabilisation of social and economic life, particularly for younger generations. In contrast to the baby-boomers and the baby-busters, these younger cohorts of people have been experiencing overall insecurity in their life-courses, and whether they are able or willing to enter the social mainstream has become increasingly uncertain. This section explores the housing situations of the ‘lost generation’. The casualisation of the labour force has particularly exacerbated the employment conditions of young people. In the context of the 1990s post-bubble recession, the corporate sector has sought to enhance business competitiveness by implementing largescale cutbacks in regular employment. Of all employees, the average rate of non-regular


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employees (part-time, temporary and dispatched employees) rose from 15.8 per cent in 1982 to 30.6 per cent in 2006. During the same period, the rate of non-regular employees aged 20 –24 increased more sharply from 11.4 to 41.2 per cent. The wage gap between regular and non-regular employees is noticeably larger in Japan compared to other developed countries (Nagase, 2002). Moreover, most companies only provide a raft of occupational welfare such as family allowance and rental subsidy for regular workers (Sato, 2007). A decline in regular employment opportunities evident among the youth labour market has been regarded as a new social problem. A relatively new word, freeter, has appeared to describe non-regular workers aged 15 –34, and more recently the word, NEET (Not in Employment, Education or Training), was imported to describe characteristics of unemployed youth. According to the Labour Force Survey, the number of freeters rapidly increased from 0.5 million in 1982 to 1.01 million in 1992, and then to 2.17 million in 2003, though it slightly decreased to 2.01 million in 2005. The number of NEET aged 15 – 34 rose from 440 000 in 2000 to 640 000 in 2005 (MHLW, 2006). The younger generation has increasingly been delaying marriage and thus the formation of independent households. Between 1980 and 2005, the unmarried rates for those aged 30–34 years old rose from 21.5 to 47.1 per cent for males, and from 9.1 to 32.0 per cent for females (see Figure 4). Unlike some Western societies, cohabitation of a non-married couple is uncommon in Japan, although such couples are on the increase. The unmarried rate is higher for men than women for all age groups. The ratio of never-married persons at the age of 50, who are defined as ‘lifelong never-married persons’ in Japanese statistics, increased to 16.0 per cent for men and 7.3 per cent for women by 2005. The figure is expected to further increase because the unmarried rate among current young people is at present high. Changes in people’s attitudes towards marriage have led to the delay of young people in starting independent households. According to a survey periodically conducted by the NHK Broadcasting Culture Research Institute (2004), the rate of those who answered “it is a matter of course to get married” and “it is a matter of course to have children” decreased from 45 and 54 per cent in 1993 to 36 and 44 per cent in 2003, respectively. The younger the respondents were, the lower the rate. Also, as younger people are spending longer in education, they are forming households later. It is, however, important to look not only

Figure 4. Ratio of unmarried people by age and sex. Source: Statistics Bureau, Population Census.

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at changes in people’s attitudes towards marriage but also the apparent tendency of young people with lower employment status to remain unmarried (Nagase, 2002). Family formation in Japan has largely been based on the ‘male-breadwinner’ family model. This is reflected in the clear correlation between unmarried rates and economic status, particularly among men. The Employment Status Survey in 2002 revealed that the unmarried rate of men aged 30 – 34 in regular employment was 40.8 per cent, while the figure of those in non-regular employment was notably high at 69.7 per cent (MHLW, 2006). Regardless of young people’s attitudes towards marriage, it is difficult for lowincome, non-regular employees to get married and form their own families. A notable new phenomenon, which has been central in both public and academic discourses since the late 1990s, is an increase in ‘parasite singles’: adult children living in their parents’ home (Yamada, 1999). Between 1980 and 2005, the rate of ‘parasite singles’ rose noticeably from 23.9 to 42.6 per cent for those aged 25– 29, and 7.6 to 24.0 per cent for those aged 30 –34 (see Figure 5). The figure is higher for men than for women, which corresponds with the fact that the unmarried rate of men is higher than that of women. The increase of ‘parasite singles’ can be attributed to a particular form of intergenerational relationship or family reciprocity. The sustained promotion of home ownership has encouraged the current generation of parents to acquire their own spacious home, which enables the younger generation to live with them as a ‘parasite’. Employment instability among the youth, which accelerated the increase in freeters and NEETs, has been perceived to be a potential factor for social destabilisation. However, the new form of intergenerational relation, which produces ‘parasite singles’, has arguably functioned as a buffer against a decline in social stability. Some commentators criticise ‘parasite singles’ for their dependent attitudes, attributing the phenomenon to a cultural tendency peculiar to Japan—parents’ overprotection of their children and the delay of young adults in becoming independent (Miura, 2005). However,

Figure 5. Ratio of ‘parasite singles’ by age and sex. Note: ‘Parasite singles’ are defined as children or grandchildren who have neither married nor left home in early adulthood. Source: Authors’ calculation from Population Census.


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taking the recent prolonged recession and the reorganisation of the labour market into consideration, it is reasonable to regard the ‘parasite’ phenomenon not as culturally, but economically rational. Many young people, whose employment is unstable, tend to have no choice but to live in their parents’ home. A survey on ‘parasite singles’, conducted by the National Institute of Population & Social Security Research (2001), found that many ‘parasite singles’ were not ‘lazy’ but, despite working, did not have income enough to establish an independent household. It has also been observed that the rate of ‘parasite singles’ has been much higher in non-regular workers or freeter than in regular workers (MHLW, 2006). Obviously, there are close links between the casualisation of the labour force, the increase in unmarried young people and the increase of ‘parasite singles’. Even in cases where young people leave their parents’ homes to form independent households, entry to the home ownership market has increasingly been delayed. As illustrated in Figure 6, the level of home ownership for households with a householder aged 30– 34 dropped significantly from 44.8 per cent in 1983 to 29.1 per cent in 1993. This was largely caused by the delay in marriage. Moreover, abnormal house price inflation during the bubble era accelerated the decrease in the level of home ownership among young households. Even after the bubble burst, the rate of home ownership did not recover but decreased further to 29.1 per cent by 2003. This is due to the continuing delay in household formation and the fact that the post-bubble recession and labour market reorganisation have made it more risky for young households to take out a housing loan. It is next to impossible for an increasing number of young people in non-regular employment to procure a housing loan. Even if a young household could purchase a house, the deflationary economy inevitably makes the real cost of mortgage repayments substantially heavier. In addition, the rising marriage age means a decrease in time that can be used for housing loan repayment. While real estate prices fell when the bubble burst, housing affordability has continued to be an issue for many young households. For example, in the Tokyo metropolitan area in 2005, the average price – income ratio was considerably high: 5.2 for a condominium and 5.7 for a single-family house (MLIT, 2006). Also critical has been the government retreat from housing subsidy. The GHLC was dissolved and the provision of corporate-based housing welfare has also decreased.

Figure 6. Changes in housing tenure of household head aged 25 – 29 and 30 –34. Source: Statistics Bureau, 1978 Housing Survey of Japan—1993 Housing Survey of Japan, 1998 Housing and Land Survey of Japan and 2003 Housing and Land Survey of Japan.

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Accordingly, housing resources available for house purchase are shrinking. Many babyboomers and baby-busters climbed up the housing ladder, supported by low-interest GHLC mortgages and company housing loans. However, young households are now required to ascend their own housing ladders by themselves via the market. Younger generation households have increasingly relied on the private rented housing sector (see Figure 6). The rate of private renting among households aged 25– 29 and those aged 30 –34 increased from 53.2 and 33.5 per cent in 1983 to 70.9 and 55.0 per cent in 2003, respectively. However, the government has meanwhile implemented tenure discriminatory housing policies, concentrating on the promotion of home ownership. There has been little assistance in the construction of private rental housing and absolutely no provision of rental subsidies. Many young households have thus been forced to seek low quality housing in the private rental market. Conclusion A normative and pervasive life-course pattern was embedded in the development of Japan’s post-war homeowner society, where many people climbed up the housing ladder towards home ownership. Along with changes in socio-economic and policy conditions, however, the fragmentation of conventional home ownership circumstances has led to the differentiation of life-courses between generations. This paper has explored the housing trajectories of baby-boomers, baby-busters and the ‘lost generation’. Unlike the babyboomer generation households who ascended the housing ladder and accumulated housing assets, baby-buster generation households were affected directly by the rise and fall of the economic bubble and witnessed substantial losses in the value of their housing properties. The ‘lost generation’ has suffered from a rapid decrease in stable employment and thus has noticeably delayed family formation and entry into the home ownership market. Generational fractures in housing opportunities mean a decline in the traditional framework of social integration, where once the property ownership system had been a key catalyst. The home-ownership-oriented housing system once generated a ‘social flow’ of people moving from rental housing outside the social mainstream to owner-occupied housing inside, which in turn generated stabilising social effects. This relationship between social stability and home ownership has increasingly unravelled. As life-course patterns have become diversified, the housing ladder has become unstable. The ‘social flow’ thus no longer runs smoothly. In the past, Japan’s housing system was a mechanism that provided people with the ‘promise’ of access to the ‘homeowner society’ during a period when the economy was considered relatively predictable and followed a clearer trajectory. Many renters in the past who aimed at purchasing a house regarded themselves as potential homeowners, and young people on low incomes, within the seniority system of wage augmentation and promotion, were able to expect an increase in income. As well, older generations relied on the paternalism of the company society and benefited from government subsidies in purchasing their own house. In the contemporary fragmented society, however, people of the ‘lost generation’ are increasingly failing to realise the ‘promise’ of post-war home ownership and social mainstream participation, and pathways into family formation, occupational careers and housing acquisition are dissipating. It should be noted that there remains in Japan considerable regional variation in the nature and impact of socio-economic change. For those outside of metropolitan regions there has traditionally been less reliance on company society and greater continuity


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in family patterns. At the same time however, Japanese cities and regions have seen considerable polarisation during the post-bubble period and gaps in wealth between cities and rural areas, and even between Tokyo and the other major cities, have become characteristic of the post-bubble era, constituting yet another dimension of social fracturing. Transformations in the housing economy, the labour market and housing policy have effectively combined to amplify the differentiation of housing trajectories between generations. This is likely to erode the conventional basis of the welfare system and social mainstream. The examination of generational housing pathway fragmentations in Japan puts these significant social changes into sharp focus. It is evident that other homeowner societies in the West and the industrialised Asia Pacific region are developing similar fragmentations and patterns of inequality as an emerging feature of the latest phase of globalisation. These changes may undermine family formation and consequently fertility, enhancing the impact of demographic shifts towards more elderly populations. A critical question to draw from Japan’s experiences is how a society organised around home ownership can mitigate generational fractures in increasingly unstable socio-economic and policy environments. Note 1. Baby-boomers are defined as people born between 1945 and 1949 when fertility rates were very high. Babybusters are classified as those born 1957–61 when fertility rates decreased. Those born in the 1970s have recently been named the ‘lost generation’, a phrase originally coined by the Asahi newspaper (Asahi Shinbun Investigation Team, 2007) to describe the generation who entered Japanese adult society in the 1990s when the economy deteriorated.

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