We did get a moderate cyclical downturn in 2011 and early 2012 but prices have rebounded across the country. Price gains are actually accelerating in the major metropolises of Melbourne (+6.31% q/q) and especially Sydney where prices are up by 6.6% in just 3 months according to RP Data.
In any case, there are plenty of markets such as in Adelaide and regional Australia where the housing market 'rebound' (if you can even call it that) has been very weak in spite of the record low cash rate. Brisbane's market has also been soft although I believe it is improving.
Australia's markets have already experienced the leveraging up phase seen in other developed countries. As the major cities grow in size and mature they are moving into the next phase, which is where residential property increasingly begins to be seen as an investment asset class, particularly in the inner suburbs.
In fact, I tend to agree. We'll likely end up with two-speed markets as Australia's population grows, with very expensive prime-location capital city suburbs which remain wildly out of whack with property prices elsewhere.
Experienced property voices have pointed out that as Australian cities balloon in size, home ownership rates are likely to fall unless revised legislation is put in place to prevent the trend from unfolding. High rates of home ownership don't, incidentally, always equate to lower prices and stability - in fact, higher rates of ownership are often synonymous with dramatic boom-bust cycles. Singapore, for example, has state policies and 40 year mortgages which encourage a home ownership rate of above 90%, but the city remains crushingly expensive.