CV comes up with some interesting points, although his hatred of the public sector does seem to get a little in the way. Of course, he is speaking of Ireland's public sector wages (I think).
Speaking personally, as a public sector worker who doesn't have any pension schemes, a 10% hit on my wage could be sustained, only if my rent was dropped by about 20%. And I can't see a private sector landlord wanting to do that. Of course, that's London rents for you.
I agree with the comments about greed, though. And it will go full cycle again. Property prices will continue to drop, and lo and behold they will be snapped up once more by the very speculators who started the boom. The rich will get richer once more as they sell/rent to those just/barely able to afford.