Effects of Housing Asset Deflation on Shrinking Cities : A Case of the Tokyo Metropolitan Area

With shrinking cities becoming a global issue, declining housing demands due to declining population leads to a reduction in land prices. Housing asset value decline occurs mainly in suburbs, which has an economic effect on elderly households. Although some issues have already been indicated, it is unclear whether the deflation of housing assets will have a significant impact on shrinking cities. I used 209 municipality bases to predict the deflationary value of home assets in the Tokyo metropolitan area from 2019 to 2045. The deflation of housing asset value was estimated by a new approach using the price elasticity model; its value is projected to be approximately 49 trillion JPY by 2045. Although the degree of deflation differed by municipality, the deflation of housing asset value occurred in areas where commuting time exceeded 30 min from Tokyo Central Business District (CBD). Additionally, the deflation value in many suburban municipalities exceeded 10 million JPY per household. Thereafter, a case study analysis was conducted using the average household in the Tokyo metropolitan area as a model household. The study results imply that deflation of housing assets is unavoidable for households in suburbs, and its value becomes new barriers to promoting compact cities