[throwthroyaboat]

This is a good point. This is also somewhat dependent on how a particular country does mortgages. The USA does 30-year fixed rate, but that is not the norm in most countries. The main benefit of lower house prices (even if the monthly finance costs are the same) is that the amount you have to save for a deposit is reduced, which is often a significant barrier for young people.

[samwillis]

That's more or less where my thinking comes from, I'm in the UK and most people fix for 2-5 years at a time.

Interest rates will come down again so the effect of them being a barrier will reduce. But the fundamental problem for most people here in the UK is getting a 10-20% deposit together when the average house price is £296k, average salary is about £27k, and average household income is £31k.