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I've been told that the Australian property market is more than 45% over valued, I've also heard arguments that there are justifications for this such as:
So what is it? Is it a big bubble or are these factors permanently increasing the real estate prices?
Note that the two issues most cited:
are a major part of what was said about the US's boom. In fact, the Time magazine article about the US boom reads like a blow-for-blow of what is happening in Oz. Not good reading.
http://www.time.com/time/magazine/article/0,9171,1069097,00.html
I think the main metric that people are looking at is the income-to-price ratio; specifically the median income to median house price. That ratio is ridiculously high in Australia.
The commonly-quoted figure for affordable housing is an average sale price of 3 times median income. That is, if the median income is $50k (which is about what Australia's is) then the median house price should be $150k. Australia's ratio is more like 6-8 times median income. Using the above median income expect houses to cost $300k to $400k. As far as I know the US's income-to-price ratio was this high right before the bubble burst.
There are many theories as to why the income-to-price ratio is so high for Australia, some of which you've already outlined in your question. Another reason that's often quoted is the tax policy called "negative gearing", where you can deduct losses from investment properties from your taxable income. This means people put up with their investment properties returning a loss with the expectation that the property price will increase more over time to cover it.
For more reading check out http://bubblepedia.net.au/
This prompts the question - who said this and what was their reasoning? There are times that property can rise with good cause, but it's usually local, not so widespread as to affect the whole country. In the US, for example, the bubble was more localized to certain areas.
If there's that great an overvaluation, builders will rush in and start to build, in great numbers. That's often what will send prices back to reality.
The three factors you mention -- "increased immigration", "shortage of land", and "shortage of construction labor" -- to the extent they exist, mean that there will be increased demand and reduced supply of housing. All else being equal, you'd therefore expect that the market-clearing price will rise. For instance, it might rise so much that emigrating to Australia becomes less attractive, or so that wages in construction rise and more people are drawn into working in construction.
(I'll note in passing that the third point seems to somewhat contradict the first: in many countries construction jobs are exactly the sort of job that new immigrants can do well, but it's possible Australia gets the wrong kind of immigrants, or unions restrict access to these jobs, etc...)
However to the extent these factors are true, you would expect them to drive up both rents and sale prices. But it seems that sale prices are rising considerably faster than rents.