Problem is that wages have been going up between 1-3% per year over the past 20 years and housing has not.
Even taking into account more women in the workforce (more dual incomes) something had to give in the end.
Some folks say that property doubles every 7-10 years... yes that can be true for a time (im talking decades) -- however doubling every 7-10 years and with wage growth as above the ratio of wages to housing does not keep up and eventually you run out of steam and the line starts to return to the mean.
Yes there are other factors in play here, but all it needed was a push like the sub-prime crises in the USA -- ours was a mini bank credit crunch to make people actually realise that they don't have a $800,000 house -- they have a house with $800,000 of debt and that is making people nervous. As if wages go up an average of 2%-3% a year then really it should take 30+ years for housing to double -- even with immigration etc, it should not be every 7 years.
It is only because of perception.... even I got caught up in it a little as you knew if you bought a house, even if you were stretching the budget it did not matter as you knew it would be worth much more in a few years... I can personally see housing in 10 years being the same price as it is now (a drop and then recovery to current levels).
I don't quite understand how the "experts" say that housing cant drop 40%, not that I think it will happen -- I am predicting a slow burn, but if housing can go up 200%, there is no reason it cant lose a big part of this gain. Remember coming down it doubles when you talk percentage. So 100% increase of say $200,000 to $400,000 only needs a 50% decrease to get back to where it started.
The other myth is that we are say 100,000 houses short for all the immigration etc.... well if we were that short on housing and accounting for the average household would be around 3 people, then I don't see 300,000 people living homeless.........
Now im not a massive downer on housing, I have a house and mortgage like most people. I just can see that if a chart would show wage growth inching forward and housing shooting to the sky, then something may have to give in the future. I don't think we are going to go back to where you grandparents bought a house for $4K and now its worth $1.2 Million 40 years later. As my feeling is that house prices are already around 10- 15 years in front of wages.... so if you buy now in 15 years it may be worth the same -- who knows 
