Freewill, this is the same old horse-cart or chicken-egg debate. However, past examples shows the "..so long as unemployment is low, there will be no crash.." theory is an utter fallacy debunked - a favourite spruike among the RE industry until now - they now bank on Harold & Kumar and the mythical housing shortage.
The reality is that a housing price crash tiggers massive unemployment (then viciously feeding back into yet lower house prices). NOT THE OTHER WAY AROUND.
Look at US (yes I can hear the jeers and shouts from the yawners that "we are different", "big Kev is white", "we have no subprime" - sorry we actually have both prime and subprime bubbles here), US unemployment now at 10% was caused by the housing bubble that started bursting more than 2 years ago (around late 2007 to early 2008).
When we first heard of subprime banging and popping, the ABC aired the 4 Corners "Mortgage Meltdown" program on the US housing bubble in September 2007, US unemployment rate was a lowly 4.7%.
Unemployment in the US in October 2008 jumped to 6.5% (a year after the bubble bursted).
Now we are dealing with the aftermath of the housing bust (still hasn't played out in full) and unemployment stands at 10%.
