A pedestrian walks past a stock price display at a brokerage in downtown Tokyo.Michael Caronna/Reuters
John Rapley is an author and academic who divides his time among London, Johannesburg and Ottawa. His books include Why Empires Fall (Yale University Press, 2023) and Twilight of the Money Gods (Simon & Schuster, 2017).
Faced with crises in housing, health care and a stagnant economy, Canadians may feel like their challenges are insurmountable. But solutions may not be that hard. To see how we might do things differently, we could look to Japan’s cities for ideas.
Take the two capitals, for starters. Ottawa has about a million residents, Tokyo some 14 times that. Yet Tokyo occupies less space. You would think that with that kind of density Tokyo, which after all is one of the world’s great metropoles and a global corporate and financial hub, would be an expensive place to live. Yet average house prices are lower there than in Ottawa.
It wasn’t always thus. Japan once had a property bubble, and at its 1989 peak, the value of Tokyo real estate reached the point that the land under the Imperial Palace was valued at more than the entire state of California. But that bubble burst and prices today are less than they were then, in part because the government subsequently changed zoning rules to allow properties to be repurposed for other uses.
Today, Japan’s bureaucratic and political obstacles to house building are few, with local governments having no ability to block new development. Moreover, there are few constraints on how property can be used. If you own a piece of land with a house on it and decide to redevelop it into a multiplex or office block, by and large, you can.
That can be annoying if your neighbour decides to build something you don’t like, but it also means Japan builds houses cheaply and abundantly. With roughly three times Canada’s population, and despite the fact the country’s population is now declining, on average Japan builds four to five times the number of new houses that Canada does in any given year.
What is productivity and why is it so low in Canada?
Trudeau says housing needs to retain its value
In consequence, Japanese cities aren’t segmented into residential, industrial and commercial districts the way Canadian cities typically are. Instead, in any neighbourhood, a variety of small businesses, restaurants, cafés and shops pops up. Moreover, the higher density that results makes public transit more efficient, creating a virtuous cycle in which more people use it, making it a cost-effective option. What results is more walkable cities.
Walkable cities where people commute largely on foot, making their way to and from the train, have obvious health benefits, with the Japanese consequently leading more active lifestyles than Canadians. Thus, despite being an older society with longer lifespans, Japan spends nearly a fifth less than Canada on health care.
Of course, Canadian cities needn’t reach the sort of density Japanese cities do, for the simple reason that Japan has a lot less land on which to build housing. That has given Canadians the luxury of living in large homes with big yards and abundant parking. But this luxury has a price. The apparent incongruity of a country with comparatively cheap land producing expensive houses reveals the high cost of this model.
The very extensive infrastructure needed to support cities built for cars, and the highly inefficient transportation system that results, both raise costs and hit productivity. Such a model also discriminates against low-income people who can’t afford cars, since they are limited in their work and socializing opportunities to what they can reach on public transit systems that end up being relatively dispersed and therefore inefficient.
Besides, even though Japanese homes aren’t as big as Canadian ones, they don’t need to be. The proximity of shops means there’s less need for storage space.
Meanwhile, Japanese life unfolds largely outside the home. That’s because inexpensive property makes most everything else less pricey, including bars, restaurants, clubs and gaming rooms, since commercial tenants pay less in rent. And so, per capita, Japan has more than three times the restaurants Canada does, making dining out a popular and affordable option. And cities that create abundant opportunities to socialize and network possess the added virtue that they can raise the productivity of a knowledge-based economy, since interaction leads to greater exchange of ideas.
So, imagine solving our housing, health care and productivity crises all at once. Of course, it’s more complicated than just redesigning cities, but it would be a good start. Nor is this news. Canadian housing advocates have for years been calling for increased density, fewer obstacles to new development and better public transit.
That it hasn’t happened is down to politics. Time and again, leaders at all levels have chosen to perpetuate an urban model based on sprawl, car-based transit and impediments to new housing supply.
So, the least Canada’s leaders could do is stop speaking of the country’s crises as intractable. They aren’t. They persist because politicians choose to entrench them. That may be what their voters want, but they should own their decisions, and the problems that come with them.