What caused Japan's real estate bubble in the 80's to pop?

Did it have something to do with people buying in the market not being able to afford it?



Thanks!What caused Japan's real estate bubble in the 80's to pop?
Japan's real estate bubble was created by overheated investment. And the collapse of the bubble was triggered by a tight-money policy initiated by the Bank of Japan.



In the 80's, land prices kept rising because companies and wealthy individuals made a lot of investment in land, instigated by a firm (and wrong) belief that land prices would never fall because of the strong economy. As a result, land prices were raised so high that ordinary people could not afford a house (The aggregate value of land in the central part of Tokyo was once equivalent to that of the whole US!). To address this problem, the Bank of Japan decided to adopt a tight-money policy at the beginning of the 90's in spite of the fact that the economy was already beginning to show a sign of downtrend.



This switch in monetary policy caused the already overly swollen real estate bubble to pop and exacerbated Japan's whole economy for the next decade, which was later dubbed "the lost decade."