Japan’s stock-market and property bubble burst around 1990, beginning the period often called the Lost Decades.
Japanese asset prices had risen dramatically during the 1980s. The Nikkei 225 reached an all-time closing high of 38,915.87 on December 29, 1989. Property values were also extraordinarily elevated. After monetary tightening and changing financial conditions, both equity and real-estate prices fell sharply.
The resulting difficulties extended far beyond a stock-market correction. Japanese banks carried large amounts of troubled loans, companies reduced investment, and weak demand contributed to prolonged low growth and deflation. The term “Lost Decades” usually refers to the 1990s and 2000s, although debate continues about the exact boundaries and later economic effects.
This episode is sometimes described simply as a stock-market crash, but the collapse was a broader asset-price bubble. The Nikkei did not quickly return to its 1989 peak; it remained far below that level for decades. Japan’s experience became an important case study in banking repair, deflation, demographics, and the dangers of delayed financial restructuring.