Could Australian house prices crash 20–30% like Canada? The data suggests Australia is in a very different position.
How Big Is Canada's Housing Market Crash?
Canadian property prices have fallen roughly 25% nationally from their peak.
But the headline doesn’t tell the full story.
Canada’s average dwelling price surged from around $550,000 in April 2020 to roughly $850,000 in 2022 — an extraordinary 55–60% increase.
Australia rose only around 25% over a comparable period, according to CoreLogic (now Cotality).
In other words, Canada had a MUCH bigger boom to unwind.
Canadian Provinces Where Prices Are Still Rising
And even Canada’s “crash” isn’t happening everywhere.
Despite immigration effectively being shut down and much higher interest rates, between the September quarters of 2024 and 2025:
➡️ Quebec: +6.8%
➡️ Northern Territories: +11%
➡️ Manitoba: +7%
➡️ Newfoundland & Labrador: +10.3%
Meanwhile, Alberta and British Columbia grew by less than 1%, while Ontario declined.
The biggest weakness has been concentrated around markets such as Toronto and Vancouver, particularly condos.
How Australian Cities Performed When Interest Rates Rose
Sound familiar?
When Australian rates started rising in 2022, Sydney and Melbourne fell roughly 10%.
Yet over the broader period discussed:
Perth rose 25%+
Brisbane rose 15%+
Adelaide rose 15%+
And some other markets increased 40–50%+.
There is no single Australian property market.
Australia vs Canada: Household Debt and Leverage
Another major difference between Australia and Canada is leverage.
Australia has roughly $11 trillion of residential property, with total housing debt representing less than 20% of that value.
Think about that like a household with 80% of its home already paid off.
Canada’s equivalent aggregate LVR is above 30%.
Australian Lending Standards Are Tighter Than in 2022
And Australian lending standards have become MORE conservative, not less.
In 2022, around 10% of new Australian loans had loan to income ratios above 6x.
Today that’s around 3%.
The proportion of new loans above 90% LVR has also fallen from around 14% during early COVID to roughly 8% today.
And Australian banks assess borrowers using approximately a 3 percentage point interest rate serviceability buffer.
That means someone obtaining a loan today is generally assessed on their ability to service rates around 3 percentage points higher than their actual rate.
Canada didn’t have the same protection built into its system.
Australian household savings have also started rising again after falling substantially as interest rates increased.
Could Australia still experience a Canada style crash?
Yes, but I think you’d need something extreme.
If immigration fell to zero AND rates rapidly increased another 3 percentage points or more, Sydney and Melbourne could plausibly experience falls of 10%, 15% or even 20%.
That would be considerably worse than Australia’s roughly 8% national decline during the GFC.
Why Zero Immigration Would Likely Trigger Rate Cuts
But there’s another problem with that scenario.
If immigration went to zero, Australia would likely enter a genuine recession.
Immigration has been a major reason Australia has avoided a technical recession over the past 3 years.
In a recession, the RBA would be more likely to cut rates, not simultaneously increase them another 3 percentage points.
And Australia’s existing immigration pipeline doesn’t disappear overnight anyway.
Nearly 2 million people have arrived over the past 5 years, and migrants commonly take around 4–6 years before purchasing their first Australian home.
So even if immigration stopped tomorrow, there is potentially years of delayed housing demand still working through the system.
Remember what happened when immigration was almost zero in 2020, 2021 and 2022?
Australian house prices went UP.
Falling Home Ownership Among Younger Australians
There is also an uncomfortable longer term trend here.
In 1981, roughly 70% of Australians under 40 owned a home.
By 2021, that had fallen to around 60%.
I don’t see that reversing dramatically across Australia.
Australian Property Market Outlook: Where Prices Could Still Rise
Sydney and Melbourne could certainly become more affordable if rates rise and immigration falls.
But secondary cities and regional markets could continue growing at the exact same time, just as we’ve seen in Canada.
That’s the key takeaway:
Australia could have a property crash without having an Australian property crash.
Some expensive markets could fall 10–20%, while completely different markets rise 10%, 20%, 30% or even 40%.
At this stage of the cycle, blindly “buying property” isn’t enough.
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Co-Founder | The Educator & Mentor
I’m also a property investor with a $27m+ debt-free portfolio of residential & commercial property, generating over $300k+ net annual passive income.
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