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News Release

Household Finances and Urban Planning Issues by Area
in an Era of Population Decline

March 01, 2006

Overview

There are growing indications that Japan is entering an era of population decline. The overall population peaked in 2004, but area comparisons indicate that the population of a majority of areas of Japan has begun to decline ahead of the overall population.

Owing to the downward trend of household size, growth in the number of households is exceeding population growth by around 1%, and the number of households is rising even in the northern part of the Tohoku region, Shikoku and other areas whose population is actually shrinking. The contribution to growth in the total number of households in any one region made by the number of elderly married couple households and elderly single person households is about the same throughout Japan, but, owing to population migration, there are considerable local differences in the contribution to growth in the number of households made by single person households other than elderly single person households and households consisting of "parents and children" or a married couple only (excluding elderly married couples).

Local differences in consumption spending patterns do not appear to have undergone significant change. Among other reasons, this is because the phenomenon of population aging is not limited to certain areas but is occurring all over Japan, the redistribution of income through taxes and social security is fulfilling its function, consumers are tapping into their savings in order to maintain their level of consumption spending, and economic conditions are improving in all areas.

In many cases, the local differences in consumption spending are not so much "gaps" between geographical areas as differences stemming from the particular history, culture, customs, and climate of individual areas. The three cities of Osaka, Kyoto and Kobe all exhibit different patterns of consumption spending.

The rate of growth of sales floor area in the retail sector is generally low for areas with a lower population growth rate and high for areas with a higher population growth rate, but for all areas is higher than the population growth rate, and sales competition is fierce. A key factor behind the differences in location of businesses in different areas is which means of transport most frequently used in each area.

The "3 urban planning laws", moves for the revision of which are afoot, seek to promote an approach to urban planning that will meet the needs of a society whose population will be shrinking and elderly, through the simultaneous use of the "brake" of measures to restrict suburban development and the "accelerator" of measures to promote the regeneration of city centers, but measures to restrict the building of new large-scale consumer-oriented facilities alone will not be enough to bring about the regeneration of city centers.

The restoration of city centers to their former vigor depends not so much on the "brake" of restrictions on suburban development as on the efficacy of the "accelerator" of measures to promote the regeneration of city centers. Many of the measures designed to promote regeneration in the past were of dubious efficacy. Given that systemic reform has substantially enhanced support measures, proper evaluation and disclosure will be essential. The trend among the proprietors of vacant land and vacant commercial properties holds one of the keys to the successful regeneration of city centers.

For more information on the content of this report, please contact: Kiyoshi Yoshimoto the Japan Research Institute, Limited.

Tel: 06-6534-5204
E-mail:yoshimoto.kiyoshi@jri.co.jp

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