Let me tell you real first hand example of my own small city in Northern India.
The real estate has doubled in last 3/4 years but the income of people living there has not increased much at all
This is a classic example of easy financing by Banks there.
10 years back, it was rare to see indians taking loans to buy house because of two reasons:
1) Difficult to get loans from Banks
2)Cultural reasons
But now, both the above factord have changed, one fueling the other. Now it is very easy to get bank loans to buy houses and thus bringing up the prices. In my own small city, in the last 4/5 years, nothing has changed substantially w.r.t. jos creation, salary increase but still the boom is there.
To give an idea fo the prices:
A two bedroom apartment/flat ( not SFR ) would cost Rs 2 millions where the average salary would be hardly 300K/year with an interest rate of ~11% there for housing loans.
