Like Paul Volcker, who did an immensely unpopular thing (soaring interest rates that caused unemployment in the short term) but ultimately created a much stronger economy.
https://www.vox.com/2016/8/8/12390048/san-francisco-housing-...
I do have some recollection of commercial real estate being bonkers there for a while, so maybe they've managed to treat one as an investment and the other as something necessary for people to live in.
This was not always the case.
https://en.wikipedia.org/wiki/Japanese_asset_price_bubble#As...
In the '80s until about '91 there was a huge real estate bubble in Japan; house prices tripled or quadrupled over less than one decade. Could it be a coincidence that the short-term rate set by Bank of Japan went from a 9% in 1981 to 2.5% in 1991?
Your link shows that real estate prices remained nearly flat in Tokyo since 1995, but at that point Japan was already in the trap of zero rates and sky-high house prices. Prices simply couldn't go any higher. People were already taking 100-year mortgages in Japan in 1995 [1]. Salaries were not going up. Nikkei was going sometime up, more often down; and kept doing that for 2 decades.
On a comparative basis, real estate in NYC and London were much cheaper in 1995. But they steadily went up, and up, and up. Now they exceed Tokyo. Rates are about zero too. We are where Japan was in 1995. Except for the 100-year mortgages. Don't be surprised if they'll make an appearance though.
[1] https://homeguides.sfgate.com/longest-mortgage-7677.html
They could go higher, but they aren't.
I've read that there's also a cultural component, that people treat housing more like a consumption good ... a car, say, something that they value less the older it gets.
This was intended to promote new construction of housing, the unintended consequences is that homes are thus not built to last and home maintenance is rarely performed.
Though in recent years, there has a been a slight boom of people purchasing second homes to renovate rather than build new.
> Doomed from the moment construction begins, the average Japanese home depreciates from Day 1 — losing half its value in 10 years and becoming almost entirely worthless in 25. This depreciation comes hand in hand with the infamous mantra that a Japanese home is limited to a lifespan of 30 years and causes somewhat of a chicken-and-egg conundrum.
[0]: https://www.rethinktokyo.com/2018/06/06/depreciate-limited-l...
[1]: https://www.rethinktokyo.com/faq-secondhand-homes-renovation...
Cheap money (very low interest rates) means cheap mortgages, and in turn this means high real estate prices. So high that you produce a trap. Housing becomes an investment vehicle, and increasing rates means you are destroying savings for millions and millions of people. Millions of people who are politically active. Whatever measures someone tries to enact that result in their real estate depreciation, they'll make sure to oppose.
Raising interest rates then requires fortitude. Generally, a developed country's central bank is independent of the other branches of the government (executive, legislative, judiciary). It has so much power, that it should be recognized as the fourth branch - monetary. Being led by technocrats who, in principle, should not care about voting arithmetics, the central bank should not hesitate to raise rates when the economic stimulus is not needed anymore.
But theory is theory, and practice is practice. In real life, you may have a president who threatens the central bank governor via twitter, and the governor all of a sudden decides to cut rates instead of increasing them. And that was before Covid19.
Prediction (and not only mine): we'll be stuck with these close-to-zero or negative rates for decades to come.
That means real estate will continue to be sky-high. That kills mobility, that makes it hard for the young generation to get jobs in the main metropolitan areas.
Maybe working from home will be an antidote to that.