The bubble pops when property is not as safe/lucrative of an investment as other instruments, and the foreign investors sell up. House prices go down, but no one can move because their mortgages are underwater (proceeds from selling the house don't match the outstanding debt). Developers stop building because no one will buy the new-builds at a price which will leave them with a profit. The situation is as before the bubble pops, but now everyone is poorer since their (inflated) home equity has vanished.

Usually this happens when interest rates go up, because then it's better to keep your wealth in a more liquid investment like cash. Mortgage payments go up as well, turning the (imaginary) loss of equity into concrete loss of income.