The reason she doesn't want her house to lose value is not out of some abstract contrary wish to be richer; it's because she has a mortgage which, when she sells and moves, she has to settle. If the value of her house has dropped by £150k, she's quite likely to not be able to do so on equity. So to buy the £160k house, she has to raise the £160k to buy it and whatever the shortfall in equity on her old house is. Which means a mortgage of more than the value of the house she wants to buy. Nobody's going to offer to lend her that, and she'd be crazy to accept any such offer. The net result of this is that she isn't going to sell her home, which depletes the supply of housing. The only way anyone else gets their hands on her property is if she is evicted for non-payment, in which case you haven't solved a case of someone not owning a home, you've just displaced it.

When you buy your first house, you have to raise a deposit to do so. When you buy all subsequent houses, you still have to have a deposit, it's just in the form of equity in your current property.

The current situation is definitely shitty, but a crash isn't the answer.