Short answer: definitely not if you are investing in the right areas.
At the risk of sounding like a broken record (ahhh, too late), smart investors have been saying for years now: invest in supply-constrained suburbs of the inner-west and certain in-demand pockets of the eastern suburbs.
Here's an actual real-life example of what is happening in the inner-west - I bought the unit below in Erskineville (off-the-plan; something I wouldn't normally advocate) in 2009 for $374,950.
Erskineville is 4km and 2 stops from Central Station. An identical unit just sold for exactly $450,000.
That's exactly a 20% increase over 3 years or a 6.3% compounding annual capital growth. Interestingly, that growth rate averages out to be very close to the median growth in household incomes...
...which is what I have long argued will happen to investment grade unit values over a long-term time horizon (though I do believe that household income growth will slow a little to nearer 5% - the historic income growth has in part been facilitated by a boom in the number of two-income households).
I've seen very similar growth rates in other inner-Sydney suburbs I invest in too, in the eastern suburbs and around the harbourside, for example.
Could prices fall? Sure they could. But with equity in this property example of $125,000 in just 3 years, I'm not exactly quaking in my boots.
And if Sydney's population increases by 1 million - hey, that's 1,000,000 people, by the way - over the next dozen years or so, if you are investing in high-demand, supply-constrained areas, you can relax.
Vacancy rates as extremely low and rents have grown very, very strongly too - as much as 15% in the past year.
I see a similar story in the south-east of England in the UK - if you are buying properties in areas with supply shortages for 25% less than they last changed hands for in 2005 and using a 25% deposit, then your long-term risk is low.
Remember property is a long-term investment. By way of comparison the FTSE 100 in the UK dropped by 2.5% in one day yesterday.
So, no the markets certainly haven't tanked - if you know what you are doing.
Erskineville: near the train station for the City and near to Newtown - ideal for young professionals.