Yeah that is true. That's why we bought an existing house in the end - luckily we were able to find an existing house that is pretty much like what we would have built anyway. By the time we spend $200,000 (and countless hours) restoring and renovating it, plus the $450,000 that it cost us (which was basically the unimproved land value), we will have a property that would have cost us nearly $900,000 to build (including the land) and worth hopefully upwards of $1,000,000. There's no way we could have afforded that. It's also got the benefit of being in an established, leafy middle class suburb with shops, cafes etc, 10KM from the CBD.
For us this was a far better value proposition than buying a cheap block 30km from the CBD in a new estate and building a McMansion, spending 2 hours every day in traffic to get to and from work - but each to their own. Also, myself (engineer - grew up in the building industry basically) and my wife (studied architecture) both have the experience and skills to be capable of doing this. Also my dad is a retired ex-plumber with good general building/landscaping skills (his dad was a builder) which helps. For most people, the idea of a full renovation is like climbing Mt Everest so building a new house in an affordable new suburb is really the only viable option for them, which I totally understand.