Canada Housing Market Just Collapsed. Is Australia on the Same Path | EP106

After the pandemic, Canada went through one of the fastest housing booms in the world. At the peak, the national index jumped 26% in a single year, and detached houses were up 35% year-on-year. But after the high in March 2022, prices kept sliding. By the time we released this video, the national index had fallen back to where it was in April 2021—and the downward trend is still in place.

You could say the past few years have been a rollercoaster for Canada’s property market. And even after multiple rate cuts, there’s no sign of a turnaround. As Australia’s national housing price growth accelerates, plenty of people are worried: will we stumble like Canada? Can rate cuts really keep Australian prices rising? Some long-time bears insist Australia will sooner or later repeat Canada’s fate.

To get to the bottom of it, I did a deep dive and found that the decisive factor behind Canada’s market is, surprisingly, the same as New Zealand’s. It’s a piece many people overlook—and it’s the key to understanding where both the Australian and Canadian housing markets are headed.

Canada’s Roller-Coaster Home Prices

Let’s get straight to it and see how wild this roller-coaster has been in Canada. By the end of August 2025, the national price index was down 19.3% from its pandemic peak. Of course, every city moves differently, so we picked the most representative—and most populous—city, Toronto, as our example. Think of Toronto as the equivalent of Sydney, Greater Toronto as Greater Sydney, and Ontario as New South Wales. With that in mind, it’s easier to follow. Ontario’s average property price fell 26%, Greater Toronto dropped 24%, and Oakville, to Toronto’s southwest, fell 31%.

On the monthly chart, you can clearly see the national market moving almost in lockstep with Greater Toronto—no surprise when Ontario has 14.7 million people, about 36% of the country. After the pandemic, prices started lifting through 2020, reached a peak around March 2022, with year-on-year gains touching 26%, and then began to slide. They’re still falling now. In three years, the national index has shed almost 20%, with some areas down 30%. Calling it a plunge is not an exaggeration.

Australia’s pattern from the early pandemic up to March 2022 looked similar to Canada’s in timing, but the actual numbers were very different. Our national price index saw peak annual growth of around 25%, while the biggest annual decline was about 7%. In other words, the upswing was comparable to Canada’s, but apart from a brief pullback in May 2023, the rest of the time has been rising. Since February this year, the market has even shown signs of acceleration.

Stack it over five years to now: Australia’s national market is up 43%. Canada’s five-year gain is 23%, and if you narrow the window to the past three years, it’s down nearly 20%. Compared with pre-pandemic levels, it’s not that bad, but anyone who bought at the pandemic peak in Canada is feeling the pain.

Canada’s population is 41 million, Australia’s 27 million. Canada is an immigrant nation, so is Australia. Canada sells resources to the United States, and Australia sells to China. Both Commonwealth countries. With social systems and property logic so similar, what has driven such a big gap in price outcomes?

1.The Housing Affordability Crisis

Look at Canada’s affordability in 2025 and you’ll see this isn’t about a single city or group anymore—it’s a disaster sweeping the whole country. The latest OECD report shows that since the Global Financial Crisis, Canadian home prices have grown far faster than in the U.S. and the Eurozone, with the price-to-income ratio up 60%. When your wages have only risen 17% but home prices have surged 76%—from $417,000 in 2015 to $735,000 in February 2025—what does that mean? It means ordinary Canadians are finding homes increasingly out of reach.Vancouver and Toronto are even more extreme. The latest international housing affordability report ranks Vancouver the third least affordable city on the planet, behind only Hong Kong and Sydney, with Toronto right after it. 

On the other hand, 2025 and 2026 bring a wave of mortgage renewals. According to the Bank of Canada, 60% of mortgages will come up for renewal over these two years, most of them five-year fixed loans taken out during the pandemic at historically low rates. When those homeowners face rates jumping from around 1.5% to above 4%, monthly repayments will rise by hundreds, even over a thousand dollars. A Royal LePage survey found 57% of homeowners expect payments to increase at renewal, with 22% bracing for sharp increases. Some are already considering selling or downsizing. You work hard for years and end up being forced to give up your home—that’s a harsh reality. And that’s assuming you’ve still got the chance to work hard. If the job opportunities aren’t there, what then?

2.Canada’s Unemployment Surge

In August alone, 66,000 jobs vanished—Canada’s worst single-month loss since the pandemic. More worrying, over just two months, more than 107,000 positions have disappeared. The unemployment rate jumped to 7.1%, the highest since 2016 outside the early pandemic. Nearly 1.6 million people are now looking for work nationwide, a surge of 13.8% compared with the same time last year.

What’s more frustrating is that this wave is destroying the key pillar of Canada’s housing market—purchasing power. Manufacturing shed 19,000 jobs. Transport and warehousing cut 23,000. Even professional, scientific and technical services axed 26,000 roles. These are the core industries that prop up Canada’s economy.

People without work have no income, so of course they can’t buy homes. Even those still employed are afraid of losing their roles; who’s confident enough to commit to a mortgage? Unemployment has spiked among workers aged 25 to 54—the prime homebuying cohort—who are now struggling just to get by. Youth unemployment is as high as 14.6%, which means the next generation of buyers simply isn’t there. With unemployment this elevated, it points to deeper problems in the economy.

3.Canada’s Economy Near Recession

Canada’s recession risk is now very high. In the second quarter this year, the economy contracted by 0.4%—that’s after a statistical revision; before the revision it was down 1.6%—and it was the second straight quarter of decline. Looking at the current trajectory, the question isn’t whether a recession will happen, but how severe it will be. The Bank of Canada’s governor has acknowledged that under today’s tariff environment, growth in the second half is expected to be around 1%. What does that tell you? Forget growing—just try not to shrink.

The Bank of Canada put the probability of entering recession by the end of 2025 at 55%—basically a coin toss. Labour productivity plunged 1% in Q2, the biggest drop since the fourth quarter of 2020. Output fell across all nine major industries, with manufacturing and wholesale trade hit the hardest. Canada’s industrial performance ranking has slid from fifth in the world in 2000 to twentieth today, and investment in industrial equipment is at its lowest since 1981. This is a structural decline. As the central bank governor put it, “This isn’t just a shock—it’s a structural change.” Pair this poor economic performance with a population growth stall, and you’ve got the perfect conditions for a housing market collapse.

If you have any questions about property investment, please book a free 15-minute discovery call on our website. If you want a team offering one-stop service to help you build a property investment portfolio, achieve financial freedom and retire early, join our VISION Membership by booking a 30-minute obligation-free discovery session to start with. Or to keep it simple, our data-driven buyer's agency service can help. We buy and manage properties for our clients anywhere in Australia. Links to the service are in the description below.

4.Canada’s Population and Immigration U-Turn

Canada’s population and immigration policy are going through an unprecedented change that no one expected. In the second quarter of 2025, population growth was just 0.1%. Apart from the pandemic years, that’s the slowest pace since records began in 1946. In just three months, 59,000 non-permanent residents left the country—the biggest quarterly drop since 1971. Think about it: from adding a million people a year in 2022 to near-zero growth now. This sudden, hard-brake shift in population policy is reshaping Canada’s economic and social outlook.

How did this turn begin? In October 2024, the federal government announced immigration cuts. The permanent migration target fell from 485,000 in 2024 to 395,000 in 2025—a 21% reduction. More striking, the government set a cap for temporary residents, aiming to bring their share of the population down from 7.4% to 5% by 2026. That means over the next two years, nearly 450,000 temporary residents will need to leave Canada. Statistics Canada projects this will push the population down by 0.2% in both 2025 and 2026. If that happens, it would be Canada’s first annual population decline since 1951.

This sharp policy pivot reflects a fundamental shift in Canada’s political and economic conditions. Since 2022, Canada has seen an unprecedented immigration surge—one million newcomers a year, with 60% classed as temporary residents. But as the jobless rate climbed to 7.1%, the housing crisis worsened, public services were stretched thin, and public support for immigration fell sharply. Economists point out that non-permanent residents now make up 7.3% of the population, down from the 7.6% peak in the fourth quarter of 2024, but still a long way from the 5% target.

What surprised everyone most was how fast and how thoroughly the policy flipped. In less than two years, Canada went from throwing the doors wide open to closing them. Study permit approvals plunged from 245,000 in the first half of 2024 to 149,000 in 2025, down 39%. Work permits under the Temporary Foreign Worker Program were also slashed—from 410,000 in 2024 to 300,000 in 2025. This drop doesn’t just dent Canada's international image; it could weigh on growth for years. Without immigration as a driver, economists expect GDP growth over the next two years may struggle to top 1%. Property prices are likely to fall across the board, with the apartment market taking the hardest hit.

5. Condo (Apartment) Market Crash

How severe is the downturn in apartments? You could call it a disaster. From 2022 to the first quarter of 2025, condo sales in Toronto collapsed 75%. Vancouver fell 37%. Inventory more than doubled, and prices fell. National condo prices have dropped to their lowest since June 2021, with the cost per square foot down 21% from the 2022 peak. When a segment that accounts for half of all new homebuilding goes into freefall, how long can the broader industry hold up?

In Greater Toronto, more than 20,000 unsold units are piled up. At today’s sales pace, it would take six years to clear them, when a normal market needs only 14 to 16 months. Buyers who entered at the top now find their million-dollar new condo is worth only $700,000 to $750,000. Data from Urbanation show that in the second quarter of 2025, Greater Toronto sold just 502 new condos—91% below the ten-year average. This isn’t a market “correction”; it’s a market collapse.

In Canada’s condo market, investors make up the majority of buyers. From deposit to handover, the timeline can be two to three years, or four to five for some projects, and in that time, the market can flip. With prices falling, both presales and settlements are in trouble. Newly finished projects and those just launched can’t find buyers. It brings back memories of 2014–2016, when Sydney and Melbourne were hot for off-the-plan apartments. Back then, investors bought in, prices rose, and they flipped before settlement for a neat profit. Developers, seeing strong demand, ramped up construction. Then in 2016–2017, tighter rules on overseas lending plus a string of government measures cooled the apartment market. Too many apartments were built, and they couldn’t be sold. It wasn’t until 2024 that the apartment market finally recovered.

Will Australia’s Housing Market Follow Canada’s?

We’ve covered a lot, so let’s circle back to the question we asked at the start. With Canada’s housing market in trouble, will Australia fall the same way? If you know Australia’s economy and property market, you’ve probably got your own answer by now. If not, no worries—here’s a comparison.

1.Canada’s price-to-income ratio is very high, but Australia’s isn’t much better. On this point, they’re almost neck and neck. When people can’t afford to buy or hold a home, they naturally don’t want to buy. But Australia’s government encourages buying—there are various grants, lower deposits, and borrowing’s getting easier. So even though prices are expensive, those who want to buy can still just manage to get in.

2.Canada’s unemployment has shot up to 7.1%. Australia’s in the opposite position on jobs: unemployment is only 4.2%, even lower than before the pandemic. If you want a job, you can find one.

3.Canada’s economy is trending down with recession risk, but Australia’s economy, for now, is holding up. At least we’re not in negative growth.

4.Canada’s population growth has stalled, but Australia’s not the same. New migrants arrive every year; with the population rising, there’s a natural demand for housing. Migration is the fundamental driver supporting Australian home prices.

5.Canada’s apartment market is plunging. Australia went through that a decade ago. After that lesson, local investors shifted their strategy—looking for scarce assets, like detached houses.

To those who are overly pessimistic about Canadian property, you don’t have to be. Even in today’s conditions, it’s not as if every housing type is falling in every city.

In Montréal, the condo market has barely wobbled over the past five years; the trend has been steadily upward. In Greater Vancouver, detached house prices are actually not far off their pandemic highs.

I’ve said in many episodes that I’m positive on Australia’s housing market for the next 20 years. That view hasn’t changed. If you’re interested, please go back and watch the last episodes. Here’s a super-simplified way to understand it: as long as migration numbers are strong, the housing market won’t run into major trouble. If migration falls short—or stops—then in the short term the market might still look fine, just like when borders were shut early in the pandemic and the government flooded the system with liquidity. But over the long run, the housing market may not hold up.

On the comparison between Australia and Canada, my view is that there is no direct comparison, because the rules of the two property markets aren’t interchangeable. Why? Simple—Australia is a different country.

You can’t really compare national housing markets, just like you can’t line up political systems, economic features, population patterns, or geography and expect them to match. Even within Australia, cycles and characteristics can be completely different from state to state, even from suburb to suburb. Cross-country comparisons are meaningless. At AusPropertyStrategy, our view is: the logic of price rises and falls is the same—supply versus demand—but the underlying drivers behind both sides of that equation differ almost entirely across markets.

Human nature works like this: we think the way to invest in property, to handle relationships, to read the economy and politics in our old environment, should apply everywhere on earth. Or we have a few “life lessons” from where we came from and think we’ve got it all figured out. When we arrive in a new place, we don’t want to admit we don’t understand it, and we don’t want to start from scratch—yet we still act like the “know-it-all.” Investing isn’t about the present; it’s about the future. Canada’s market isn’t great right now, but the trend I see is the national index building a base. When policies shift and the economy improves, a booming market can happen very quickly.

Watch the video version of the blog on YouTube.

15 Minutes Free Consultation (Limited-Time Free Offer)

If you have any questions about Australian real estate, we invite you to use our 15 Minutes Free Consultation service. Once you have filled in the form, a professional property investment strategist will be in touch with you. They will assess your needs and provide fundamental advice. This service is designed to help answer general property-related queries. BOOK NOW.

VISION Membership

Our Flagship Service: VISION Membership. Your One-Stop Property Investment Manager – Build a Tailored Portfolio and Achieve Financial Freedom

Whether you're an employee, a professional, a business owner or even a new migrant, everyone has a financial goal for the future. The VISION Membership is designed to solve all the pain points in your Australian property investment journey through one single, comprehensive service.

By analysing your current financial situation and long-term goals, we'll tailor a property investment plan just for you. Our team will match you with the ideal mortgage structure, tax strategies, wealth planning, and legal support, empowering you to go further, faster, and smarter on your path to financial freedom.

VISION Membership is perfect for busy individuals who want a professional team to create, expand and manage their Australian investment portfolio. If you're looking for a dedicated team, including real estate investment experts, mortgage brokers, accountants, financial planners, and property solicitors, VISION Membership is your ideal solution.

Start with an obligation-free 30-minute discovery session on Zoom. BOOK NOW.

VISION Buyer’s Agent

No time for inspections? Tired of dealing with pushy selling agents? Unsure how much to offer or feeling nervous about auctions? Worried about buying the wrong property? If any of these sound like you, AusPropertyStrategy's Australia-wide VISION Buyer's Agent Service is here to help.

We provide end-to-end support to help you build an optimised property portfolio and achieve your financial goals—whether you're investing interstate, refinancing, or planning post-settlement leasing or resale. Our services cover everything from suburb research and property selection, to price negotiation, auction bidding, and post-settlement support.

Start with an obligation-free 30-minute discovery session on Zoom. BOOK NOW.

real estate australia,real estate investing,australian property,australian housing market,australian economy,australian property investment,australian property market,buying property,australian real estate,mortgage brokers brisbane,first home buyer,Australian Real Estate,Australian Real Estate Investment,Australian Property Investment,Real Estate Investment,Property Investment,Property Investment Australia,Passive Income,Positive Cash Flow,Australia Real Estate Investing,Australian Real Estate Investors,Australian Property Investors,Vision Wealth Mentors,Vision Real Estate Investors Australia,financial freedom, freedom through property investment,real estate investors,property investment,passive income,positive cash flow,real estate course,real estate courses,real estate training,australian property market,property investment brisbane,property investment sydney,melbourne property market,investing in brisbane,investing in melbourne,how to invest in property,buying properties,start investing in property,property investment strategy,how to buy investment property,property investing tips,best suburbs to invest in sydney,locations real estate,prime location,property growth by suburb,capital growth suburbs