Michael Duffy wrote an opinion piece on property rights for the SMH on Saturday. ("Safe as Houses? Don't Count On It" at http://smh.com.au/news/opinion/safe-as-houses-dont-count-on-it/2006/01/06/1136387622255.html. )
The fundamental flaw in the Duffy piece is the assumption that on acquiring "real property" one can, does and should acquire an unfettered right to do anything you like with that land.
This is clearly not the case. At all times you acquire land with the full realisation that there are other processes, run by Government as representative of the people, that can change your use of the land. Indeed the property "rights" that have been acquired are only those that are explicitly stated. The property rights lobby is at times guilty of the same failing as the free speech lobby, that is the extent to which the right should be unfettered, irrespective of land use policy (offensive language in the case of free speech) or intrusion on neighbours (defamation).
Yes, property rights are important for the functioning of a capitalist market economy. But what is important is that there is a set of rules for allocation which are followed. To claim all the unspecified "rights" as accruing to the property owner is just as wrong - when you buy a suburban residential building block you do not buy the "right" to build a ten story office tower.
And while real property rights are a means of "wealth" creation - asset price bubbles are just as damaging to the economy in residential housing prices as they are elsewhere, potentially more so as housing mortgages receive a 100% risk weighting in the calculation of lending institutions capital adequacy. What that means is that a sustained drop in the value of residential property would put real strains on the entire banking system.
There is clear justification for compensation when a property right is acquired - that is why the Federal Constitution guarantees compensation "on just terms". But this needs to be clearly understood as being different from the risk that Government policy on building materials or fire ordinances might change. Similarly, property owners do not owe Government compensation when changes result in appreciating values, such as rezoning to allow a commercial development or the improvement in value due to better transport links.
Finally, the core case on which Duffy wrote was a potential heritage listing of former display villages is really a case of an inappropriate policy. There are plenty of ways of "recording" these villages without having to preserve them. However, it should be noted that what attracts residents to these kinds of areas remains the amount of open space - because the houses really were "poky" compared to the land blocks. But if every resident goes and builds a block filling "McMansion" these areas will become indistinguishable from the newer developments further West.