Japan rental housing: Investment fundamentals remain strong despite country’s aging population Part 1

This report is the first in a three-part series analyzing the factors driving rental housing demand despite Japan’s aging and declining population.
 
#1　Advancing urbanization, changing demographics, and evolving household structure
01 Demographics and urbanization
02 Household employment and economic status

Summary

• Japan’s total population has been on a downward trend since peaking at 128.06 million in 2010. Government projections suggest that the total population will decrease by 20 million from its peak by 2050, falling below 100 million in 2056. At the same time, Japan’s labor force continues to expand on the back of active participation by the senior generation and women. Currently, 30% of the population is concentrated in the 21 major cities. As inward-migration to urban areas with plentiful job opportunities continues, the urbanization trend is set to intensify. Even in a society with a declining birth rate and an aging population, stable demand for rental housing is expected to persist in urban areas.

• In major cities, single-person households account for a high proportion of the total, representing approximately one half of the total number of households in Tokyo 23 wards, Osaka, and Fukuoka. In addition to students and young workers migrating for education or employment, the number of single senior citizens remaining in urban areas to maintain their employment or lifestyle is also expected to rise. It is projected that by 2045, one in five Japanese households will consist of single senior citizens. While the younger working generation has a strong tendency to rent, active single senior citizens will also likely become a primary target demographic for single-person rental housing.

• The expansion of female labor force participation has led to a rise in dual-income households. The number reached 13.33 million in 2025, increasing by more than 20% over the past decade. Furthermore, the trend toward longer working hours by married females is considered a factor driving the increase in household income, particularly in urban areas. While households where married females work within their husband's tax dependency still account for nearly 50% of dual-income households, so-called "power couples" (defined as both partners earning JPY 7 million or more) account for about one-fourth of the total and are steadily increasing. Data also suggest that dual-income households, which possess financial security capacity, are more likely to have children and tend to have a larger number of children compared to single-income households. Consequently, the rent affordability of dual-income households in urban areas is rising, meaning that demand for rental housing from such families should have further potential for growth.