In Swedish big cities, prices are also ridiculously high despite investment in properties being much harder than in Australia or the US due to some strict rules regarding renting out. I live here now but lived in Australia before. Prices in Stockholm are more or less on par with Perth or Brisbane I think (i.e. crazy, but not at the completely off-the-charts Sydney prices, at least... when I lived in Sydney like 20 years ago I remember you already needed half-a-million to get just an average house... today it's like well over a million to get anything at all).

Can confirm that as interest rates went up, people just can't afford the enormous loans anymore and prices of houses (and apartments to a lesser extent as they're a bit cheaper overall) fell, up to 20% at the worst, I believe. But as soon as interest rates are expected to go down, prices already shoot up again (even while interests are still high as people and banks estimate how much they may expect to spend in the near future).