Flog, you should have another look at the graphs on the first page of this thread: Rents have been very closely following inflations for years, and in relation to general cost of living across the country aren't higher than in other countries, with the exception of a few centres like Melbourne and Sydney, but the same is true in other large cities around the world..
The fact is that there has been an unsustainable price hike in Oz housing prices over the last ten years or so, closely linked as discussed to the resources boom and baby boomer spending. Once those two influences start to wither (and they will!), house prices will come crashing down.
The ABC quoted one of the pre-eminent real estate academics in the US the other day saying "real estate returns over the last few hundred years have averaged around 1 percent" (!!!) and "if it were any other way in the long run, people would not be able to afford to buy a house as prices would permanently and irrecoverably detach from incomes". The latter has happened to a degree in Australia (average house price being 7.5 times average annual income, as opposed to 3-3.5 times in the rest of the world), supply and demand laws dictate there must be a crash to correct this imbalance!