Are you arguing for affordability? You can't have both affordability and high price (= huge % of net worth).
It's a very bad thing for people to invest in a fundamentally depreciating asset and expect a return, there's literally no other way to get a return then besides inflation.
And sure, returns have been low, but that's because the real interest rate in Japan for the last 30 years has been negative! You can't get a return if the fundamental balance of loanable funds leads to a negative real interest rate, you need stimulus instead, which they've been trying for over thirty years! And shocker, now that we're seeing Japanese interest rates rise, Japanese stocks are shooting up!
You seem to be implying Japan's scenario adequately mirrors the U.S. In other words, they have a high proportion of their net worth tied up in real estate, which is what I am pointing to as a driver of NIMBY-ism. If that analogy doesn't hold, then I would argue it's not an apt analogy and probably doesn't offer much in terms of policy insight.
Also, in the US, I don't think you can argue that real estate in general is a "fundamentally depreciating" asset. I don't think the recent history is illustrative, but over the long term real estate tends to be positive.
Real estate is fundamentally depreciating: you build a building, it exhibits wear and tear, it's worth nothing in the long run. Assets are usually valued off of future cashflows, which would be the long-run rent it can fetch. For most investments, you just shove this into a calculator with the current risk free rate and it spits out a number that's the current price. The rent declines in the case of a building with the wear until it's condemned, at which point it goes to zero. I'm saying this because just because something is fundamentally depreciating doesn't mean it won't have real yields, my point is looking at the yields from a capital appreciation perspective is kinda distracting where fundamental yields come from. Usually, capital appreciation is far more muddled (did capital become cheaper, leading to bidding up of yields? did people secularly just want to pay more for renting a house? etc)
Of course in the US there's been huge capital appreciation: housing and shelter went from 10% of CPI in the 60s to 40% of CPI today! Are you going to keep drawing the line and say "yeah, it's totally reasonable for us to continue it to have capital appreciation out-of-line of actual yields when supply and demand are balanced" - like how far is enough for you? 50% of CPI? 60? You're never going to be able to get the real appreciation that we've had over the last 40 years because that'd take us to 160% of CPI!!!
You understand that a real estate asset is not just the building, right? The land is what typically appreciates in value (maybe the building depending on labor/material costs). I've also already pointed out that recent history is anomalous in terms of property appreciation. Still historical averages are generally positive.
Regardless, all of that is a digression from the original question: does Japan have a similar dynamic where the bulk of household net worth is tied up in real estate? That's central to my claim that people are more protective of the assets tied to their wealth. In other words, we need to be careful about thinking Japan provides an example if there is a different wealth dynamic. It seems like you are trying to have a different conversation.
It's a very bad thing for people to invest in a fundamentally depreciating asset and expect a return, there's literally no other way to get a return then besides inflation.
And sure, returns have been low, but that's because the real interest rate in Japan for the last 30 years has been negative! You can't get a return if the fundamental balance of loanable funds leads to a negative real interest rate, you need stimulus instead, which they've been trying for over thirty years! And shocker, now that we're seeing Japanese interest rates rise, Japanese stocks are shooting up!