Average family size in Japan

Large family 

The average size of a Japanese family is about 3 or 4 people. Due to the small size of house and high prices, average couples don't have enough room or enough money to afford a large family.
Most Japanese people want their children to have a high standard of living (or to give higher education), they limit the number of family members to 1 or 2.. (i. e. average number of children of a Japanese family is 1.37 (birthrate as of 2008) )

Nuclear family (two generation)

In the past, especially in rural areas, several generations would live together in a house. Recently because of lack of space, it is getting rare to see grand parents living with their children and grandchildren.

Influenced by Buddhism and Confucianism, Japanese people traditionally respect elderly people. Many people still want to have their parents live with them or nearby.
It is good for children to live close to grandparents.

Just for information, children live together with their parents until they have their own new family, even they become 30 or 40 years old, if circumstance is permitted. (without problem of commuting to working place)