'Rabbit-hutch nation' yearns in vain for more room: Prospective house-buyers are being priced out of the market, Terry McCarthy writes from Tokyo

HIROSHI SUZUKI is in his early forties, has been working for the same company for more than 15 years, and has risen to a managerial position with considerable responsibilities, often having to use up his weekends on business trips within Japan for company meetings. He is married with two children, and once confided that his salary is 'just under 10m yen (pounds 40,000)' - way above the national average, which is closer to pounds 25,000.

But partly because he and his wife are saving for their children's education, and partly because his company has said he may be transferred to another town, he has not bought his own house. He lives in a small two-bedroomed apartment, and when I first got to know him he used to make jokes about Japan's notorious 'rabbit- hutch housing' to cover his embarrassment at the size of his house.

Like most Japanese, Mr Suzuki would dearly like to own a house, but he cannot afford to. Buying a house is a huge venture in Japan, with land prices as high as they are: on average, a house costs seven times a worker's annual salary, even more in the Tokyo metropolitan area. Since Mr Suzuki's company cannot tell him where he will be working in the next five years, the whole investment is too much of a risk.

Statistically, Mr Suzuki belongs to the second-richest nation, per capita, in the developed world (after Switzerland). When I told him that, he just laughed. 'Europeans and Americans have a much better life,' he said. 'Japan is different.'

The government of Kiichi Miyazawa has, at least on the surface, admitted this discrepancy. Mr Miyazawa has pledged repeatedly to make Japan a 'lifestyle superpower'. Campaigning for the upper house elections last July, he acknowledged that Japanese are seen to live in the infamous rabbit hutches.

But behind the rhetoric, the government has shown as little interest in improving citizens' standards of living as it has in cleaning up political corruption. Japan, as Mr Suzuki says, is different.

Take last month's supplementary budget, for example. A total of Y10.7 trillion, or 2.3 per cent of the GNP, was earmarked for reviving the country's sagging economy. Of that, a mere Y800bn was destined to help the consumer, in the form of increased public housing loans. The rest was concentrated on helping businesses and the financial system to get out of its slump. Not a whiff of tax decreases or anything else to help the long-suffering workhorse population. But a closer look at the budget shows that not only is it not consumer-friendly, it will actually make life even harder for the would-be house-buyer, by attempting to keep property prices high. This is in contradiction of Mr Miyazawa's pious goal of reducing house prices to an average of five times a worker's salary. More than three-quarters of the budget is aimed directly or indirectly at supporting property prices at their high levels. This is to stop the nation's banks getting into hot water over imprudent loans, using property as collateral, in the 'bubble economy' years that begen at the end of the 1980s. No one, however, is complaining. The government is highly practised at stimulating Japan's remarkable group psychology. The prospect of the annual growth rate dropping below 2 per cent (to levels that the British Treasury, can only dream of now) has been blown up into a nightmare that apparently threatens the existence of the nation. There are dark hints that Japan might even suffer job losses - horror of horrors.

So Mr Suzuki and his compatriots shell out Y84,920 each to pay for last month's budget, to save the necks of a small group of bankers and real-estate speculators. Not surprisingly, the financial markets loved it, and the stock market has leapt by 25 per cent.