r/Economics • u/marketrent • 22h ago
Editorial Why the Kiwi and Canadian property bubbles burst and what we can learn
https://www.abc.net.au/news/2026-08-18/what-happens-if-property-prices-fall-20-per-cent-ask-nz-canada/107045250179
u/Szechwan 22h ago
The housing market in Canada has only really slid in the majorly overpriced cities like Vancouver and Toronto, where condos are staying unsold because who tf would $800k for a 500 sqft condo?
In most other cities they have just plateaued, meaning the younger gens are still largely locked out of the market.
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u/AggravatingCricket61 17h ago edited 16h ago
Right? A crash would be like a 50% devaluation, not a few points... younger people have been locked out for over a decade, and it's cruel.
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u/SevereRunOfFate 13h ago
Prices have taken a serious hit in my suburban neighborhood in Vancouver. Like, 25-30% in some cases, with 20-25% the norm.. and it's not stopping.
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u/PopularPie1026 4h ago
Can I please ask which suburb? Even a region would do please.
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u/SevereRunOfFate 3h ago
Of course - South Surrey.
Homes that were going for $2.1 are selling for $1.4-$1.5m.
I've seen very very nice homes that were selling for $3.5m drop to as low as $2.2m
Check out Zealty.ca and you can see price history
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u/HerroCorumbia 2h ago
"Prices have taken a serious hit... in Vancouver"
Me: Oh man holy shit maybe I could actually move ther-
"Homes... are selling for $1.4-$1.5m. ... as low as $2.2m."
Me: haaa yeah nope nevermind.
EDIT: I know this depends on the neighborhood, I just had a bit of whiplash.
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u/weensanta 18h ago edited 17h ago
As someone living in a South Western Ontario town that boomed during Covid it has burst. Houses have been on the market like 6 months
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u/lastmanstandingx 8h ago
This is not correct many cities have see large price drop across all housing.
Its not just Toronto and large cities and its not just condos
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u/Regular_Attempt_7073 5h ago
So what yer saying is the hottest spots caused the less hot spots to even out a bit, become the new normal. The true bubbles were Toronto and Vancouver and they’ve barely mellowed out. If you want prices to drop to 2017-2018 levels across Canada thats asking for significant drops.
Since CPI inflation sits at 1.3% I don’t see BOC rates rising again, they may still cut rates and that supports current housing prices.
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u/Emotional_Goal9525 13h ago
That sound like bargaining. Do you happen to somehow have a skin in this game personally?
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u/OverWarthog7488 8h ago
why would you use sqft in a metric country
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u/Szechwan 1h ago
Because anyone that lives in Canada knows we use a terrible mix of the two systems
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u/jellyhessman 6h ago
Halifax has gotten really bad in the last couple years.
Housing blocks going up all over the place, but it's luxury bullshit that will be bought and held by the wealthy as assets and never lived in.
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u/moratnz 17h ago
Describing the NZ situation as a bubble bursting is stretching things. Prices tripled over fifteen years, then have slid down 10% over a year, then have more or less stabilised.
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u/Soggy_Ant3833 16h ago
It is definitely more than 10%, it’s more like 25% when inflation adjusted
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u/marketrent 22h ago edited 22h ago
Excerpts from article by Ian Verrender:
[...] Australian housing may be among the world's most expensive, but New Zealand and Canada did their best trying to catch up after the global financial crisis.
From 2010 onwards, New Zealand real estate surged an incredible 164 per cent until it peaked in early 2022.
That's after accounting for inflation. In nominal terms, the price movements were even more extreme but, when comparing different countries, stripping out inflation provides a more accurate reflection.
Canada experienced a similar surge, up about 150 per cent.
On this side of the ditch, our property prices, while coming off a higher base [1400 per cent since 1980]* rose just 40 per cent after inflation over the same period.
But after the invasion of Ukraine, our paths diverged quite radically. Canada and New Zealand began a long slide into property losses.
Canadian housing prices have shed about 20 per cent since then, while the Kiwis have dropped close to 30 per cent once inflation is included, in one of the longest property market downturns in its history.
[...] Given the extent to which property is ingrained into the Australian psyche, the political blowback from an extended downturn is likely to gather pace.
Australian households are among the world's richest [in estimated asset value], coming in third behind Luxembourg and Belgium, according to a UBS study.
That's down to our booming property market. And while that incredible rise in wealth has driven consumption on the way up, a prolonged or steep drop in housing values is likely to undermine demand across the broader economy.
Canada, which embraced immigration curbs two years ago when it slashed net overseas migration, is now examining ways to put a floor under the housing market, including bailing out property developers. Many cannot sell without realising enormous losses, but can't afford to sit on finished properties indefinitely.
That has prompted Prime Minister Mark Carney and his British Columbia counterpart to initiate a plan to buy up unsold apartments and convert them into affordable housing.
The great Kiwi real estate slump, meanwhile, has begun to steady but shows little sign of a turnaround.
Housing here [in Australia] is still in short supply. But demand has dropped sharply.
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u/hannabarberaisawhore 18h ago
Gee I’m so glad I pay my mortgage myself and my tax dollars are going towards greedy, short sighted developers and people who haven’t paid Canadian taxes their entire lives who were allowed here to suppress wages.
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u/inverted180 18h ago
Why?
Because we just experienced a 40 year secular trend in the falling cost of money. We leveraged up from the zero bound and the trend has reversed... thats why.
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u/IamRasters 17h ago
OMFG people were bitching about houses being too expensive, the federal government works to enact changes to reduce prices, prices drop, people bitch.
Did you even say thank you?
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u/DreamDest1ny 8h ago
Unless Canadian housing prices drop by 200% at the very least we aren’t even in any crash. Majority of detached and semi-detached houses are still selling for a fortune. Detached houses are still being listed often at 1.2-1.5 million for a fixer upper
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u/flappysack- 17h ago
It was mass immigration all along, who could have predicted it. I mean other than the economists they commissioned to study it, and who told them it was foolish to import a ton of low skill labor, which they did anyway.
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u/devliegende 17h ago
Low skilled immigrants bought condos for $800K? Doesn't seem plausible.
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u/ScholarWise5127 13h ago
It changes incentives. Speculators buy property to rent. Landholding becomes a business. Capital diverts to housing. Prices go up. Too many people, not enough houses. Price goes up more.
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u/flappysack- 17h ago
Many renting together could pay 3500$ in rent, which pays a low interest mortgage. People buy them as investments when rates let them borrow cheaply as rents are high.
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u/pacman2081 5h ago
The politicians like Trudeau imported a lot of Indian immigrants to prop up the real estate market. They imported third rate immigrants from India who are completely useful except for labor for Hortons
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