Japan’s 1989 stock-market collapse marked the end of its asset-price bubble.
During the late 1980s, Japanese share and property prices rose to extraordinary levels. Easy credit, optimistic expectations, financial deregulation, and heavy bank lending helped push the Nikkei 225 to an intraday peak of 38,957.44 on 29 December 1989. Property valuations also soared, reinforcing the belief that Japanese assets would continue rising.
The Bank of Japan tightened monetary policy, and the speculative boom began to reverse. The Nikkei fell sharply after its 1989 peak, while land prices continued declining for years. The collapse ushered in a prolonged period of weak growth and falling prices often called Japan’s Lost Decades.
The event is sometimes described simply as the Japanese stock-market crash, but it was part of the wider Japanese asset-price bubble. The bursting bubble affected banks, companies, households, and commercial property as well as listed shares.