Firstly yes we have plenty of space in Oz but who wants to live two hours drive from where they work?
Second you have to understand one of the basics economics 101 (micro economics), supply and demand. In days gone by people wanted stand alone homes on a decent size block, for the most part they still do and that has lead us to the urban sprawl we have. Demand for property closer to the city were most people work is much higher, higher demand means higher prices.
If you look at real estate listings you will see that the further you go from a city centre the cheaper property becomes so yes there are properties that are quite affordable but the trade off is they may not be desirable locations.
Another reason property is less affordable is that in days gone by homes were 3x1 or 4x1 and not many had a garage let alone a carport under the main roof. These days homes are 3x2 or 4x2 with a study, theatre room and double garage, also homes are built more energy efficient so there is the added cost of that.
So truth be told there are very affordable home around just requires people get their priorities in order, if they want to be close the city they can by a smaller home or apartment, if they want a larger or stand alone home they need to look at outer suburbs.
