Yes agree, although we could still see house prices rise in the short term, due to immigration. Longer term however, prices must fall relative to average household income for the reasons you give (housing in NZ is even more unaffordable).
However, there is a further factor currently being overlooked by most commentators:
The developed world has been experiencing a decline in birth rates for a couple of decades now, which is already resulting in actual population decline in many countries. Most developed countries that are succeeding in maintaining, or growing their populations are only managing to do so through immigration. Australia and NZ fall into this category.
This trend has recently started to spread to the rest of the world, and is now also affecting most developing countries outside of Sub-Saharan Africa.
Russia, most of Europe, and most of eastern Asia are facing actual population collapse. In our region the only country still exhibiting classic exponential population growth is the Philippines. At the moment we (Aust & NZ) can draw all the immigrants we want from there, and from other Asian countries such as India. But already there is considerable (and growing) competition for these people from Europe and Nth America. If other eastern Asian countries (such as Japan, Sth Korea, Taiwan, and even China) can overcome their cultural xenophobia and start to invite immigrants, then they will further add to demand.
As Australia and NZ start to lose out to other countries in this increasingly competitive immigration market, our populations will start to decline. Once this begins, the housing market must also decline. However, this trend will not be evenly spread. Small towns and rural areas will be the first to feel the effects. This is already being observed in Spain, Italy, Japan and Sth Korea, where some regions already have a problem with declining and aging populations and abandoned houses. In many of these places young children have become quite a rare sight.
I think the impacts of this global super-trend will become obvious in Australia & NZ within the next decade.
(20min delay)