Artificial restrictions on supply, artificially low interest rates (supply of credit) to keep the bubble inflated. Free markets at work. (I am not sure if this is actually the case in Melborne, but it certainly is in many other major cities - London comes to mind).

Yep, Australia has a massive real estate bubble, and when it pops, we're screwed. However, despite all the things you mentioned, people are still willing to pay the pricetag... because those places in the top 10 are nice places to live. If they weren't nice places, they wouldn't be able to leverage the higher prices.