That line, though:

I tell her that the flat she could have bought for around £20,000 would now be worth somewhere between £350,000 and £400,000.

No, it fucking wouldn't be "worth" £400,000, it would still be worth £20,000, but you'd need to fork over twenty times that much for it. That's the problem. The worth of the houses haven't gone up, but the prices demanded for them has. That flat went from costing a year's salary to costing ten years' salary.