Land and house 'investment' is the major factor causing Australian housing to inflate in price. There is more than enough land for 50 times the population, however it is sold by land holders at a drip feed to ensure they get more for their land each time. Then the developers take their part, the cost of improvement and such adds to the basic land price and then the cost of capital improvement. Before the home owner/renter steps foot in their property there has been a massive level of profit already made. Then come the capital gains speculators, who only buy the property as an asset that basically solidifies cash into something that appreciates over time, without having to do anything, sometimes these investors will own several properties and not even rent them out, just using them as a safe haven for their cash. These investors will not part with the house at a loss, and don't care for the dips and waves of the market. Then comes the home owners with more dollars than sense who will pay whatever the seller wants, sometimes competing for the same property. And many other levels of investors, before an immigrant and their family buy an entry level property in poorer crammed in suburbs. Yes, immigration adds a small amount to the price pressure at the lower end, but the main driver of Australian properties and rental prices is people investing to make money from the property market, AND, no lack of people willing to pay the prices advertised. At some point rentals will have to adjust to follow the price of housing.
The only way to stop the appreciation of the housing market is to make it less attractive to own a house, get rid of negative gearing, beef up capital gains tax, increase interest rates on investment loans, increase rates and land tax, introduce death taxes and so on.... Things like inheritance tax make it very hard for generational land holdings, unless the land/property is financially cash positive, as the tax on large land estates basically wipes out any profit you can make, so no more land banking and drip feeding land to developers and so on... With those sort of taxes the capital gains investors will flee and the prices will collapse, but there will not be many 'empty' houses as you will need the rent to make any empty property even remotely viable.