That's because they actually let higher interest rates knock people out of the market. Today, the banks are engaged in fraud extending mortgage amortizations which avoided a tidal wave of supply hitting the market last fall. And we had more free land 30 years ago. It's not a question that immigration is currently excessive and is a major part of the problem.
It's funny how most people think Canada's real estate never crashes because there's SO MUCH demand for housing. Sure, you have a lot of demand from rich immigrants that live in countries like China and Iran (source of their wealth is questionable to be honest), but everyone seems to ignore that laundering is probably a bigger factor and the government doesn't care. Why? Those same "launderers" have photos beside Trudeau. Those same launders own hotels around the city. Hell, go search up the owners of Edwards Village in Markham, and do some digging on those names.
Have you even charted out the rise in income vs the rise in home prices? It proves one thing. Most Canadians are equity rich. The problem with equity rich, is, well, you don't really have anything. But Cryptopreneur, I have $800k in home equity!!!!! WOW! You're paying the bank 8%-10% to use your OWN equity? NICE! And what exactly are you doing with that equity? Cryptopreneur, I'm going on vacation! NICE MAN!
Don't even get me started on this with regards to developers. Most developers are crooks. Colliers have crooks operating within them. Ever wonder why plazas are constantly replacing shops with different names? Over-market leases are intentionally being signed and the plazas are sold off to others (whom are unaware of the internal dealings) at low cap rates. These are called "phantom leases" and are illegal. What does this cause? A market that's almost impossible for new developers, like myself, to enter. On one hand you have families that had great grandfathers buy up most of the land, and they're just developing as generations pass, and then you have launderers using proceeds of crime to buy up lands, lots, assemblies, etc. and they could care less if they overpay or overspend.
Sorry for the rant. It's just such an easy fix, but it's being ignored, for good reason. Think about this. A family got busted for drug/steroids trafficking in the basement of their $10m Mansion, yet, they're developing at a minimum, 6 more mansions all at once as we speak. Is their wealth from their prosperous development business? Sure, if you want to turn a blind eye.
And don't even get me started on banks... @Undead pretty much nailed it. It's funny, Marketplace calls out those committing mortgage fraud, maybe they should make an episode on banks themselves.