Thanks for the chart. What you have done is shown that you have confused an interest rate with the value of money - what I called 'x' in my previous post.
House prices may have inflated faster than real or available income but this has NO relationship with the cost of borrowing money! So... Money (wages growth from 1990) is now worth less than property (property growth from 1990)
Let me put it this way...
You may have had to borrow 100,000 at 18% in 1990 Now you have to borrow 1,000,000 at 18% (in 2010)
But 18% is STILL 18% (and 7% is still 7%!).
I agree with you. Our wages and the value of money has gone down in respect to property, but really, this is no reason to think that interest rates will stay low forever!
I stick with my first statement. Those that bought places assuming that interest rates would stay at historically low levels forever only have themselves to blame. 7 and 8% interest rates are only AVERAGE, and trust me, can get much worse.
(That is the reason that, 3 years ago, I bought an apartment and not a house).
