I believe Tokyo requires demolition after a certain amount of time or ownership change right? Not entirely sure, and Ive also seen some info that suggest real estate has appreciated in Tokyo lately.

Point being maybe its demographics and regulation, with a cultural attitude that jives with it and even explains the regulation to demolish, but not attitude being operative.

Things probably get baked into culture and practices even in situations where they aren't really optimal.

What we have in the US is far from optimal. In many 'hot' markets during the recent runup in prices, houses were "making" more money in a year than the median household earned. That's a recipe for a whole host of problems.