Fair point. But do you think the market could handle a 50/70%...

Fair point. But do you think the market could handle a 50/70% drop
And we are talking about established housing.
I can't see the cost of new houses going down that much which means employment in the housing construction could drop as they might not compete with established housing.. I know negative gearing will be on new housing only, but can't see that compensating.
And as more and more new home buyers start looking at established, by pure supply and demand, established housing prices would start to rise again.
Then they look at new builds, then established goes down again. Unfortunately for all the intentions (I wont say good) of both sides of politics, by it's very nature housing prices are cyclical. 
But then I am just a couch economist theorising on stuff I am not qualified to do.