Bear in mind that house prices in Australia are  at an extreme in terms of income to cost ratios.  It is (or at least was) up there with the US, Spain and Britain.  Not so many years ago you could buy a house in Australia for 2.5 times the level of income and these days you pay more like 7.5 times income.   In the earlier days you could not borrow from equity so I guess it kept the lid on prices.  Once this changed then more investors entered the market which was good as it created jobs and boosted the economy.  In my view things started to deteriorate when it became ok for investors to take on more and more debt relying on escalating prices to cover their debt and provide them with more oportunities to buy additional properties.  On top of that it became  fuelled by the opportunity to borrow even beyond the price of the property (includes money for new car).   They were happy days (for some) but it left in its wake for the people behind who had to borrow more and more for the same property that someone a few years before bought for a song.

So the above path we were on was on the basis that house prices would still keep rising notwithstanding the high price/income ratio we had reached.  The bubble had to burst and it will burst a lot more than it has today….although unlike the US it will more subtle (won't go to $0 price tags).  In some ways the credit crunch in the US (excess house debt and oversupply of houses) has no doubt put the world into a financial spin and perhaps Australia will be spared less the drama of worse off countries but at least in terms of house prices it has brought us down to earth perhaps softer than it would've been had more years gone by when the burst would not have been so subtle).   Regardless of the economic woes coming towards us to be sure there will always be a property market available to astute investors.  Houses at the lower end of the market will always be in demand wherever there is employment and a shortage of housing.  Likewise, in urban areas in good locations where demand exceeds supply and of course in pristine/elite areas and areas where land itself is short in supply for future developments.  The capital growth of properties in general  is going to be off the boil for a long time but for long term investors the bargains are still there and always will be.  Good investors try to keep the level of debt to a sensible level ……for me (and I have done very well based on simply land and location) never let overall debt become higher than overall equity ie no less than 50% total equity in your property portfolio. 
Regardless of the prevailing world financial crisis, the bubble on house prices had to change re the points I made earlier on income/price ratio hikes.  House prices are already spiralling downwards in the other countries like Britain and will probably get worse now that it is in recession and we know Australia house prices will be impacted further as we approach the door of recession regardless of our more secure economy (based on China). 
Any investment has risks (our stock market!) but if the property is good and in a good location that at least provides a guaranteed rental yield then it could make for an excellent long term investment.  Not a time now for the short term capital growth hunters in my view.
Cheers  Carpe

Um, yes I have.

Some ideas follow. Some could be prolonged but some are impossible to avoid in the short term. I will note those with an *

1 – FHOG boost gets taken away.
2 – Unemployment keeps increasing. *
3 – Immigration keeps decreasing. *
4 – Stock increases as BB leave work and sell both PPOR and investment property. *
5 – Negative gearing is reassessd.
6 – Bank lending criterior is tightened further. *

As for the 500k replacement cost, that can easilly decrease.

1 – Land is in a bubble because state govt and developers have been maximizing revenue but soon they will realise that 10 sales @ 250K is worth more than 2 @ 500K.
2 – Commodoties have already dropped so building materials will end up costing less.
3 – Overpaid tradies will become increasingly desperate as construction decreases and work for less.
4 – REAs will start talking vendors down in bids to stay employed.

It's all tightly connected Harb. Already, near me, 4 bedddys on reasonable blocks are getting close to what I would consider worth buying. And they are only 40K more than a tiny townhouse is worth??? Yeah right. The buyers that have been supporting the market these past few months have little to no deposits and have had finite amounts extended to them as a mortgage. Poor buggers have been sucked in by some pretty evil federal policy. That is the only real floor at the moment.