Japan’s asset-price bubble burst in 1990, beginning a long period of stock and property stagnation.
Japanese stock and land prices surged during the late 1980s amid easy credit, speculation, and optimistic expectations. The Nikkei 225 reached its record closing level of 38,957.44 on December 29, 1989. It then entered a prolonged decline as the bubble deflated.
Property prices also fell heavily, damaging banks and borrowers whose balance sheets depended on inflated collateral values. Weak demand, financial-sector problems, and delayed recognition of bad loans contributed to Japan’s extended economic difficulties.
The phrase “Lost Decades” is often used for the later period of sluggish growth, though its exact starting point and duration are discussed by economists. The event is distinct from a one-day crash: Japan experienced a lengthy unwinding of both stock-market and real-estate speculation.