This is theoretical MBA101 speech:

In reality, those ideas do not apply to the housing market, esp. as there is no real competition; and because the demand is absolutely inelastic (if we are already applying in MBA-wording universe)

Also, that this is true you can see if you compare to housing markets which "are more free than the Australian"

Of course demand is elastic.

Do you think, people will migrate to a city with an unaffordable housing (unaffordable for them)?

Unless you are living in North Korea, the competition is also there.

The regulation is single family zoning. Zoning makes it impossible to stack high rise apartment buildings in the areas that people want to live in.