How do sale prices correlate to rents?

Yearly rents are about ~2% of the price of property, In US it is about ~7%. So yes rents are cheaper in India because that's what market can afford.

In Bangalore, sale price/monthly rent ratio in an ok neighborhood would be around 200. In a pretty good neighborhood this go up to to 300-400. Mumbai is more expensive than this. Nobody buys property in India and makes a killing off the rents -- its mainly the price appreciation (inflation is around 6-7%).

That's the classic real estate bubble.

In countries of > 1 billion people who are racing towards development, the real estate bubble just goes on and on. Even in smaller cities, real estate is seen as a very profitable investment as even more people make the rural to urban transition, jacking up demand to stratospheric levels.

Population of Bay area is about ~7 million. Not even 100 million. The real estate bubble is going on for 50+ years here. So, it is nothing to do with population. Today what we call as growth is just a bubble.

Bubbles always last longer than you'd think, but at some point they all end. Absent some kind of crazy government intervention, prices are ultimately supported by rent.

In china, people are banking on urbanization: because poor farmers are really going to be able to afford a small apartment in the city for $1 million. Really.