Which averages? Have you chosen median or mean? This really matters when you have huge outliers - like in London house prices.
One of the reasons London house prices went up so much during the bust is that cheap stuff had gone down in value, partly because there weren't any buyers due to lack of mortgages. But there's loads of foreign money going in to £10m places in Park Lane, and they're buying for cash.
Also, I believe that Rightmove report asking prices, not actual selling prices. Which the papers love, because they're higher. Offer prices are up by 15-25% in the last year in my SE market town, but of the actual selling prices I've seen the move has been just a few percent.
Admittedly there has been a bubble in house prices. But I'm not sure how much that's down to wealth inequality, or if it's down to a massive increase in demand for housing in the South East. We've had historically high levels of immigration for the last 15 years, low interest rates, decreasing household sizes (both parties in a divorce often buying somewhere, for example), and house-building hasn't been growing to match demand. People don't like stuff being built near them - and many British people don't seem to like living in flats, in the way the rest of Western Europe do. Hence the flat market actually started to crash in 2005-6, before the banks and housing market did.
In my opinion one of Gordon Brown and Ed Balls many mistakes was moving from RPI to CPI inflation. When the history of the recent boom is written I think it'll show that most people stopped getting better off before the turn of the century, because housing costs were rising too much further than incomes - and yet people were being told an inflation rate that didn't include housing costs - the biggest cost most of us have to cover in our lives. I said it was a bad policy at the time, but the press seemed to absolutely adore Brown for some reason. He could do no wrong back then. I was rather sad to see the Conservatives not reversing it, but apparently Osborne asked the Bank of England to look at sorting this in some way in 2010 - can't see him doing it in a pre-election budget though.
Average incomes have been falling since 2005. I'd love to see some good figures that measure disposable income after taxes, bills and housing for the last 40 years.