One point is that most people do not want to live in an old house that someone lived in (or worse, died in) before. There is a strong tendency towards building new houses on old land.

I can only speak for Tokyo, but it basically means that if you buy land for $400k and build a house for $200k, the value of the second will slowly approach zero, while the price of the land does what it does.

In Tokyo this appreciates a bit, so your wealth remains more or less the same.

If you go outside of Tokyo though, where the ratio becomes more like $50k land, $100k house, it’s easy to see that it’s not something you do as an investment. Land won’t increase in value there either as everyone is leaving for Tokyo.

Not sure about land values specifically, but residential real estate in Japan generally doesn't appreciate much, if at all, outside the center of the most major cities. There are multiple factors I imagine, like shrinking population and the general aversion to buying used homes. Until fairly recently, homes weren't generally designed to last that long anyway. A lot of homes of the deceased are just abandoned due to the costs of demolition.

It's possible this could change somewhat going forward as newer homes have much better construction. This would still depend on the country figuring out how to grow the population though.