The assumption made in the argument that property will track inflation (let alone be a half decent investment) is that it's reasonably priced right now. It isn't. The poor sods who actually use a house as intended (to live in it) have had to put their lives on hold for twice as long because of the idiotic culture of speculation in this country.
Aided by tax dodges and foreign demand, but ultimately the demands on owner occupiers was at the edge of decency when the GFC hit, and it really hasn't improved much. Unfortunately there are too many self-interested property speculators and investors (the latter being the small minority who acutally build new stock, rather than squeezing out the owner occupiers) for the politicians to undo the unjust tax dodges, but a market correction is nonetheless overdue, and the moment a recession hits, house prices will follow.
Low interest ratse have to an extent been capitalised into houses, but soon, IMO, so will the inherent insecurity of employment in 21st century Australia (i.e. sending prices down). With capital gains maxed out (unless you think CPI is a decent gain), even the tax dodges won't hold that much of an attraction, and people will see the 3% return on property as the stupidity it is.
The only way to make money out of property in this county from this point is to buy in derelict areas pre-gentrification (e.g. Footscray), or otherwise currently undervalued areas (perhaps Docklands in Melbourne) which will undoubtedly go up.
