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It is high time the British realised a people cannot become rich by selling ever more expensive houses to one another

First, anybody who thinks it is a duty of the state to help keep housing expensive is crazy;
second, policymakers should respond only to clear market failures; and,
third, with a floating exchange rate and an independent central bank, the UK can weather the storm if it keeps its head.
Martin Wolf, Financial Times April 17 2008 19:56

Investors in mortgage-backed securities must be aware that UK house prices have risen by a good 150 per cent since 1996, in real terms.

Indeed, It would take a 25 per cent fall in real prices to put them on to the 1971-2007 trend line, last hit in January 2002.

Such a decline is conceivable. Prices might overshoot downwards, but they are nowhere near that position now.

Full text

Nice chart of UK Houseprices 1984-2008
Daily Telegraph 10/4 2008