Australia is so big that there's still plenty of land available where you could build new cities (and not just in the desert).

It's just that everyone[1], given a choice, would like to live near the beach in Sydney's eastern suburbs[2], and there is most definitely no more land available in those suburbs. So the only alternative is to build up, and the boomers sitting in their multi-million dollar houses that were originally bought for $3.95 don't like that prospect one bit.

[1] Not everyone, but you get the point.

[2] and Melbourne's inner east, and the desirable parts of Brisbane and Perth.