How much truth would you say there is in the idea that buying a house in Japan is a fool's game?
I live in a rural area, but in my experience most Japanese people will rent while they are single, then build a house (and have kids) right after they get married. Multi-generational homes are also pretty common. One of my co-workers recently got married and the house they built has a split level design, so part of the house is partitioned off for her husband's parents, they even have their own front door. Another co-worker owns the land adjacent to her parent's home and then built on that land.
I once asked a co-worker about buying homes in Japan and he was mortified at the idea of buying a home rather than building his own.
Then again, my girlfriend's parents are planning on moving soon and will be buying a house rather than building one from scratch. My girlfriend also said she would rather buy an old house and renovate it than build one. So there are definitely exceptions.
Japanese houses needing to be knocked down and rebuilt every few years anyway
I haven't heard anything about that, but I do know that a lot of the building regulations changed after the Hanshin earthquake and a lot of homes aren't really disaster proof so people would prefer to err on the side of caution. I believe the government also provides some sort of financial assistance when it comes to demolishing homes too. A lot of people moved away from the rural areas to work in the city during the 80s and 90s so after their grandparents pass away the homes were just left to rot, fall down or catch fire (or maybe all three), which can be pretty hazardous. I believe the discounted demolition rates were to avoid that kind of situation.
On a similar note, when I first came over here I noticed that old homes and buildings would usually have a for sale sign on them, they would then sell, get knocked down and construction would start. These days the trend seems to be for the realtor to skip the first step and just knock the building down and advertise the land for sale.
Absolutely broke my heart to see an old cafe that was built in the 50s get knocked down recently. The interior was all brick with these beautiful arches and stained glass windows. Now it is a patch of dirt.