Households' average financial assets rose 6.8 percent from a year ago to 11.5 million yen (77,169.27 pounds) in 2017 thanks to a 25 percent rise in Japanese stock prices, an annual survey by the Central Council for Financial Services Information (CCFSI), a body administered by the Bank of Japan, showed on Friday.
But uncertainty over Japan's social welfare provisions being maintained among a rapidly ageing population prevented households from turning to riskier investments, underscoring the challenge the central bank faces in nudging the country's risk-shy population to invest rather than save cash in accounts.
The ratio of households who made ends meet as expected or felt better-off rose to 30.7 percent from 29.2 percent in the previous year, as more people joined the workforce amid a tightening job market, the survey showed.
But 54.1 percent of households' financial assets were held in savings and bank deposits, with only 8.9 percent held in stocks, the survey showed.
When asked how they choose which financial assets to hold, 46.6 percent said they would prioritise security such as a guarantee of principal, with only 18.7 percent saying they focus on profitability.
In a worrying sign for the consumption outlook, a record high 43.2 percent of single households said they had no plans to own a house, more than double the ratio 10 years ago.
While it was unclear from the survey why households preferred not to own a house, it may be because more day-care and other facilities catering to seniors are becoming available in Japan's ageing society, said Kengo Kato, deputy director-general of the CCFSI.
"More people may be feeling they don't necessarily need to own a house" in preparing for retirement, he told a briefing.
Japan's economy likely expanded for a seventh straight quarter in July-September, thanks to robust exports and consumption, a Reuters poll showed.
The Nikkei average hit a near 26-year-high this week on expectations of strong corporate earnings, while the jobless rate slid to levels the BOJ considers as close to full employment.
But inflation and wage growth remain subdued, casting doubt over the long-term sustainability of the recovery.
The survey targeted 8,000 households nationwide from June 16 to July 25, with 47.1 percent replying.
(Reporting by Leika Kihara; Editing by Eric Meijer)
By Leika Kihara