I'm not attempting to blame the victim fester.
Plenty of people truly are the victims of this bubble and have little choice but to either take out a cripplingly high mortgage or keep paying cripplingly high rent, or live with the social difficulties of existing under the same roof with a bunch of other people and thefore having no space of their own.

But I do also agree with Clive Hamilton that there is a significant "affluenza" factor in all of this. An article in the Courier Mail showed a young couple who were over the moon that the FHOG being doubled now meant that they could afford to take out a mortgage. Couldn't afford one before apparently. The photo shows them smiling broadly while standing in front of a house that was the very epitome of the term "Mcmansion". This childless couple were buying a truly huge house with a grand, two-story entrance reminiscent of a Roman temple. How widespread is the desire for ever bigger and flasher? Not all that rare, I think. So while this is certainly not the whole story, it is a part of the problem.

Are you certain building costs have halved? You might possibly be correct over the longer term but I think that in more recent times, the huge volumes of money poured into the industry can only have inflated them by a fairly hefty margin. Tradies have at least doubled their income in a relatively short space of time and this must be factored into building costs.

Col, in response to one of your queries: the property industry paid about $2.5Bn pa in wholesale sales tax prior to the introduction of the GST; it now pays about $30Bn in GST. That's one of the reasons why housing is now much less affordable than a decade ago: government taxes and charges now make up 20-30% of the cost of a new dwelling. That increase in the cost base of new homes (detached houses and apartments) has affected the affordability of all dwellings as the increased price of new dwellings has been capitalised into the whole stock of housing. Whatever measure you choose to use: median multiples, housing mortgage and rent stress, public housing waiting lists, or homelessness, we have a housing crisis in Australia, and Wendell is correct in identifying government planning failure as a prime cause.

Where are all the McMansions you speak of? I see plenty of apartments and housing being constructed, but very few would befit the McMansion epithet. Perhaps you could direct me to a google map where I can view street upon street of these constructions?

"Are you certain building costs have halved?"

I read an article a few years ago comparing the cost of building a house in the early 1950s and fifty years later. The building cost had more than halved. Yes, costs have increased since the article, but I doubt that they have doubled. I'm finding it very difficult to access historical information on house prices and costs on the internet, so I will look to other information sources as time permits, then post the information on another thread.

I look forward to discussing this topic further in future.

To finish, here is a link claiming that the price of a basic house and land package has traditionally been about three times the median wage.

http://www.greataustraliandream.net.au/home%20truths.pdf