I don't think the UK housing market is anything like as robust as people think.
I suspect it is cushioned by supplyside issues to a much greater extent than the American market, may be up to 30% of value to be lost tho.
Is it though? This strikes me as one of those 'reasons the bubble will never burst' arguments.
Because:
1/ So much of the UK housing stock is being bought by corperate investment houses to turn a quarterly profit. The minute the housing market starts to seriously decline, they will shift thier properties like shit off a shovel - long term investment isn't what they're about.
2/ Another big driver of growth has been people in late middle age who are financially stable, buying multiple properties as an alternative to investing elsewhere. They would like to invest long term for thier kids, but I suspect they will increasingly be forced to offload property to bail out thier underperforming pensions.
That's why the supply could be a lot more volatile than people think. Where demand is concerned, commentators tend to assume that wealth distribution in the UK is a linear scale from the richest to the poorest - in fact, the UK's wealth is increasingly polarised. So we coudl run into a situation where practically everyone who can possibly afford a house has already got one.
They also ignore the elasticity in the demand among young buyers - these people are buying a house because they want one, and because for now it's a good investment. They don't
need to own property - they could easily rent or live with thier parents if they had to.
There's also wider economic factors such as what an economic downturn would do to economic migration into the country (esp. London) and the knock on effect on rentals.
There is a long term issue with the number of houses being built in the UK, but bubbles and crashes are all about the popular perception of the facts, not about the facts themselves. I think the UK risks getting into a situation where middle-class retirees start to sell at a rate too great from cash-strapped younger buyers to take up, prices drop, the corperate property sector panics and sells en masse, and suddenly the supply/demand relationship is turned on it's head.