The persistent gap between approvals and completion is new, not extant prior to 2010. Actual costs of building have little to do with price rises - they have been only a little over inflation. Of course the governments have a vested interest - NSW in particular is addicted to stamp duty. Developers can tell you things, but actions tell another. They would rather hold off building at all to value capture zoning changes on already profitable projects. While Australian planning rules and admin could be better they're actually pretty good with most developments approved, and that in 3-4 months.
But that's missing the point, as it's been driven almost entirely by investment in existing houses. Since negative gearing was reinstated in 1987 the proportion of existing dwellings in all investments has gone from 45% to 92%. Of course low interest rates are a factor, especially as they distort credit markets (secured loans such as housing see rates fall further than unsecured ones). That's loose credit. The real change is price-to-income ratios, which blew out from about 4 to over 6 during the boom, as banks leant more against the same income. Investor lending doubled between 2010 and 2015.
Also worth mentioning that foreign buyers were up to 15% of new and 7% of existing dwelling purchases (even though supposedly they can't buy existing). That's not a small amount. It's a sad indictment that the government thinks foreign investment returns are a greater good than affordable accommodation.
You clearly don't sympathise enough to actually propose a workable solution, as the only genuine solution is lower prices, now and long term. Of course people will put off buying when they fall, but they'll buy when they've stabilised at a lower level. Rents will go down too, which will help them buy. If you can combine it with wage growth then prices don't even need to fall very fast. 2% fall a year with 2% wage growth decreases price to income from 6:1 to 4:1 in only ten years (all hail compounding). I don't think many will put off buying to try capture a 2% yearly fall.
Why should people invest in housing that they don't need to build wealth at the expense of people who do? Especially as investment in existing housing produces nothing, and is only an exchange in the sector, yet as prices rise faster than incomes it decreases long-term the amount of money available for value added consumer purchases. It's as good an example of a malinvestment as you could ask for.
People aren't purchasing houses to provide a wealth backstop to make riskier investments later on, they're predominantly making highly leveraged investments that rely on prices rising at a steep rate to make a capital gain and provide a cash windfall, at the equal expense of new buyers. I know housing-as-a-retirement-plan is a thing but it misses both the moral implications of impoverishing future generations (who won't have the same option open) and the economic ones.
Land might be safe in isolation and short term, but long term it has been a primary risk factor and was responsible for the catastrophic 1893 depression, which saw half of Australian banks fail.
It seems that investors have been bestowed this 'God-given' right to make a return at the expense of, well, me for starters, but pretty much everyone under 28. Where's the morality in treating houses not as places for living but as speculative commodities?
If you want someone to blame for lack of risk-free returns, blame the RBA. You think that we'd now know from Japan that long term suppression of interest rates doesn't help, and indeed harms, an economy, but it's more convenient to cling to failed theories and models (and enriching your mates via the Cantillon effect).