I'll offer a more blunt opinion:
People are generally stupid, short sighted and greedy, I have seen hundreds of folk watch the value of their house rise and immediately go and get a conservatory built on the back. Last time I looked into the value this added, it was 10%, that's 10% the cost of the conservatory, not the house, so at 5k they have just spent 4.5k which they will not get back.
The next thing they must do is borrow against the house to get a secondhand, clocked, ex-fleet, silver 3 Series BMW on the drive to 'keep up with the Joneses'. (Older types will get a Golf)
Then comes the laminate flooring, and huge TV.
If there is any money left they MUST have a jet wash for the new brick drive and PS2, etc., etc., plus a mini moto, and other 'boys toys': All on credit cards.
It's a long story but I would come into contact with these types a lot and out of curiosity I would ask them if they thought there would be a house price crash. The answer, from just about all was no.
The credit crunch is more than a crunch IMO, it's the start of it and a lot of stupid, greedy people are going to lose their homes, some through not being able to re-mortgage and others through not being able to borrow more to live.
Borrowing money in the way we have been doing for the last few years is over.
Like I said people are generally stupid, short sighted and greedy.