Canada

What it does do is stabilize city budgets. Low density suburban units carry a huuuuuge infrastructure burden on cities to maintain. In most places, the suburbs cost more to maintain than they generate in tax revenue, hence why so many North American cities are in such poor finances

Kind of. Per unit of area Tokyo is every bit as expensive as even the most expensive parts of Canada, yes, but when you are buying a smaller area that does put it in greater reach of the average person. The idea being presented is that people would rather have a small space to call their own over having no space, while current policy pushes for a minimum amount of space that is usually larger than the small spaces people will accept.

The declining population argument doesn't really work because, while the country as a whole is bleeding population, everyone still wants to live and work in Tokyo.

Metro area Tokyo has as many people as Canada.