According to a recent report (Feb) by a Memeber of the Monetary Policy Committee (see here:
http://www.bankofengland.co.uk/publi.../speech335.pdf) if house prices fall by 15% in 2008, that would result in 5% of people with mortgages being left in negative equity (which is 2% of householders overall).
The interesting point is the drop in value of property linked to the financial markets, and the squeeze on the mortgage industry. Combine this with people being released off a low interest rate fixed 3 year deal into the new environment, and although they may not have negative equity, they may still be either on the edge, or unable to make repayments.
It's quite an interesting read, although events are moving quite quickly - and with all the media talk of job losses/bankruptcies etc the slow down/recession may become a self fulfilling prophecy.
Say it enough times, and everyone will believe it unfortunately.