Maybe it's population decline instead of severe population increase beyond what society can sustain. It's like the infinite economical growth didn't account for finite resources.

Always wondered what happens to housing in countries that rapidly depopulate. Like, Latvia losing 1/3 of its population, or Japan losing 4 million in 10 years. So they now have much fewer people for the same housing supply? Does it all just get abandoned?

Yes. Country side or old industrial downs die out with properties will have negative value. While prices in places like capital regions can be unsustainable. In Finland this is happening. Thankfully other growing or sustainable large cities still have somewhat reasonable prices outside most central core.

Yes mostly the small villages get abandoned and life concentrated in the cities.

So it does not help the housing problem all that much - sure there are now houses available in the countryside but no one wants to move there.

But there isn't a major housing problem in the cities at all: there's lots of housing, and lots of new construction for new housing, keeping prices in check. The problem everywhere else is that people don't want to build housing, and that factor doesn't apply in Japan. Here, if you can buy the land, you can basically build whateverTF you want on it. So in desirable places, big real estate companies like Mitsui Fudosan buy up land and build apartment blocks or tower mansions on them, and in farther-out (less dense) places old houses are routinely demolished and replaced with new ones. There's no worry about NIMBYs keeping you from building.

The population in Tokyo and other desirable cities is rising, not falling. The population is falling in small towns and rural areas where no one wants to live any more.