Looking online, I found a dictionary entry which claims that reports states [my translation from the Japanese]
IOW, the report is saying that the Japanese live in small homes, rather than simply stating that many live in apartments/condos.
The site seems to be made by an amateur, so I have no idea if it is authoritative or not. I haven’t been able to find the report online (well, a couple of halfhearted tries isn’t the most noble of attempts, but it doesn’t seem to be something which is likely to be found).
If this entry is accurate, then the 1978 white paper would be a good candidate.
I moved (again) to Japan in 1990 in the height of the Japan economic bubble when the stock market and real estate prices were sky high, and I heard the expression in Japanese frequently.
Japanese themselves loved to point out the ridiculous nature of the Japanese housing situation, especially in the major cities, so I wouldn’t discount the possibility that the phrase originated from Japanese usage.
Here is a graph of the concentration of urban population in Japan.
In 1940 on the eve of WWII, 63% of the population was rural, while in 1960 it was revered. By 1973, the percentage of the urban population had skyrocketed to about 75.7% and then slowly increased to 78.6% in 1990, when it sharply grew again to its current 91.1%.
The jump in the 60s and 70s came in part from the increased industrialization and concentration of manufacturing in the larger cities, and Japan required a large amount of new housing, a saw the construction of large multifamily buildings which the individual units were quite small. Around 1990 to 1991, I looked at a number of apartments in Tokyo that were built in that era. The bubble made even those tiny places quite expensive.