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Look at it this way - People sell houses every day, so have a think about the reasons people sell their houses.
It might help to look at whether most sales are based on NEED vs WANT. I think you would probably find that most are based on NEED:
- moved interstate for work, so NEED to sell
- moving to retirement village, so NEED to sell
- died, so NEED to sell
- lost my job, so NEED to sell
- had a child and require a larger house/upgrade from apartment, so NEED to sell
- divorced my wife/husband, so NEED to sell
- this house is my superannuation and i'm about to retire, so NEED to sell
- paid 8x my wage for a house because the bank said i could afford it, but i can't, so NEED to sell
versus WANT:
- WANT to move to a different location
- WANT to upgrade to a nicer/bigger home
- WANT to move to another home because I just feel like a change
(feel free to add to these lists)
Death and divorce would have to be the biggest contributors in the NEED category. The WANT factors are flexible, but the NEED factors will remain regardless of economic climates.
Also worth noting, is that the primary reason for owning your own home (being an Owner Occupier) is for shelter and security. The majority of owners in Australia have bought pre-boom, and have probably made 100-200% capital gains in the previous 10 years. If they are not in the business of making money, i'm sure they're not going to be frightened by 20% losses off of 100-200% capital gains. Home owners who've held for the long term through booms and busts are rarely effected by depreciation in the value of their homes, but they will still have reasons they NEED to sell (as above). It's the people who've overextended themselves or bought at the peak of this bubble that are the one's who will lose out directly due to house price depreciation.
