Australia has the same problem Canada does. It's strapped to China on growth with a dependency on natural resources. Now that China's growth is over - they're about to become Japan due to extreme debt, bad demographics and the easy growth having filled out years ago - Australia needs to find a replacement engine for its economy.
Canada has already realistically slid into a recession. They'll have a bad ten years, due to the perpetual oversupply of oil, weak China and strong dollar. Their households have taken on vast amounts of debt in the last decade. All of those things are likely to pop their real estate bubble, either directly or after low interest rates push the prices higher.
A nice thing Australia has going for it, is that its net median wealth per adult is well over twice that of Canada (and the highest of any major nation). It can afford to lose some of its frothy real estate market without a disaster occurring. The bad part is, the household income to debt ratio is around 170%, on par with Canada, and nearly twice that of the US. As with Canada, a lot of that household debt is of course mortgage debt, and it'll continue to steal capital away from economic growth in the coming years.
I think Australia will take a hit, have 10 to 15 bumpy years of low growth and falling asset prices (which will be confused for deflation when it occurs). It'll otherwise weather the storm well. Australians seem to tighten their economic belts when they need to. The focus will be directed at paying down debt and getting out from under the fallout of the former real estate boom.
Australia has a good reputation for coming around eventually. I expect the government will in the next few years. It'll take time for the economy to adjust of course. The upside is, Australia has built up a fair bit of wealth, and significantly boosted its GDP / output in the last ten years. Always nice to make a big economic change from a strong position than the opposite.
Canada has already realistically slid into a recession. They'll have a bad ten years, due to the perpetual oversupply of oil, weak China and strong dollar. Their households have taken on vast amounts of debt in the last decade. All of those things are likely to pop their real estate bubble, either directly or after low interest rates push the prices higher.
A nice thing Australia has going for it, is that its net median wealth per adult is well over twice that of Canada (and the highest of any major nation). It can afford to lose some of its frothy real estate market without a disaster occurring. The bad part is, the household income to debt ratio is around 170%, on par with Canada, and nearly twice that of the US. As with Canada, a lot of that household debt is of course mortgage debt, and it'll continue to steal capital away from economic growth in the coming years.
I think Australia will take a hit, have 10 to 15 bumpy years of low growth and falling asset prices (which will be confused for deflation when it occurs). It'll otherwise weather the storm well. Australians seem to tighten their economic belts when they need to. The focus will be directed at paying down debt and getting out from under the fallout of the former real estate boom.