Re: Simple in theory, not so simple in practise.
The running order I've observed since the early 80s is
(i) there's an excess of savings looking for somewhere to be placed so
(ii) banks /building societies increase the multiple of income they'll lend and relax the criteria for mortgages (5 times income rather than 3.5 and of course we don't need to see evidence - self cert's fine)
(iii) with more (mortgage) money to spend prices go up until they hit a maximum and activity start's to slow unless or until
(iv) there's a contraction in lending either (a) government action to prevent overheating (1988 -Nigel Lawson & MIRAS) or (b) Government does SFA to prevent overheating and it all collapses in a pile of shit (2007 - Northern Rock).
(v) at this point house prices (aka values) drop through the floor. It might be sensible for the economy as a whole for lots of places to be repossessed and for the banks to take the hit in lost equity but as no one wants to piss away most of their wealth all that happens is activity drops with only those who really overstretched themselves and those who bought so early that they still have equity willing to sell. Since wholesale repossession is political poison interest rates drop enabling home owners to survive negative equity.
(vi) when a combination of increasing wages and increased lending erodes the cost of entry the market picks up. A few years later it goes nuts.
The major difference in this cycle is that with interest rates at near-zero and a banking system recovering from serious burns there's no pressure to increase lending. Whilst the economy has finally picked up wages haven't as we are employing more people (both native and migrant). Which puts the mockers on the usual recovery mechanism.
So, with a lack of new entrants, we're falling back on landlords to keep the market alive. People with savings have to put them somewhere so instead of giving them to the bank to lend to other people to buy houses they buy them themselves and let them out. In most places this has stopped house prices dropping rather than boosting them - the exception being London & the big cities (where the population is expanding) and indirectly places within commuting distance.
I think the real issue is that the barrier to entry for my kids generation is the equity of my generation. With 66% of households owner occupied good luck getting us to take a significant drop for the rest.