Which Japanese asset-price bubble burst in 1990, beginning a prolonged market decline often called Japan’s Lost Decades?

The Japanese asset-price bubble burst in 1990, beginning a prolonged market decline associated with Japan’s Lost Decades.

During the late 1980s, Japanese stock and land prices rose dramatically. Easy credit, optimism, and aggressive lending helped push valuations far above levels supported by underlying profits and rents. The Nikkei 225 reached its historical peak of 38,957.44 on December 29, 1989.

The Bank of Japan then tightened monetary policy, and asset prices began falling. The Nikkei lost much of its value during the early 1990s, while banks were left with bad loans backed by depreciating property. Weak demand, financial-sector problems, and slow growth persisted for years.

The phrase Lost Decades usually refers to the 1990s and, in broader usage, the years that followed. It does not mean that every Japanese market or economic measure declined continuously. The episode is a classic example of how a property boom and stock-market bubble can reinforce each other before collapsing.