In real terms, house prices in the UK have risen considerably over the past several decades, particularly when compared to average incomes. This not only affects the ability of first-time buyers to get on the property ladder, but impacts consumer spending and other aspects of the economy. In this episode of the Marginal Babble Podcast, I sit down with Professor David Miles CBE to discuss real house price inflation and the role interest rates are playing in this regard.

David is a professor of financial economics at Imperial university, has held the position of Chief UK Economist at both Merrill Lynch and Morgan Stanley investment banks and was a member of the Monetary Policy Committee at the Bank of England from 2009 to 2015.As ever, referenced research material is included below.Enjoy!Professor David Miles CBE:https://www.imperial.ac.uk/people/d.milesReferences:1) UK Interest Rate History / Graph & Facts, propertyinvestmentproject.co.uk, 2024https://www.propertyinvestmentproject.co.uk/property-statistics/uk-interest-rate-history-graph/2) Official Bank Rate history, Bank of England, 2024https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp3) United Kingdom Historical Inflation Rates, inflationtool.com, 2024https://www.inflationtool.com/rates/uk/historical4) Gross domestic savings (% of GDP) – China, World Bank, 2024https://data.worldbank.org/indicator/NY.GDS.TOTL.ZS?locations=CN5) Countries in the world by population (2024), worldometers.info, 2024https://www.worldometers.info/world-population/population-by-country/6) Car parc in China from 2011 to 2022, Statista, 2024https://www.statista.com/statistics/285306/number-of-car-owners-in-china/7) UK house prices and three decades of decline in the risk‑free real interest rate, David Miles & Victoria Monro, 2019https://www.bankofengland.co.uk/working-paper/2019/uk-house-prices-and-three-decades-of-decline-in-the-risk-free-real-interest-rate8) Countries by Population Density | Countries by Density 2024, worldpopulationreview.com, 2024https://worldpopulationreview.com/country-rankings/countries-by-density9) Map of London's Green Belt including sites threatened with development, London Green Belt Council, 2024https://londongreenbeltcouncil.org.uk/10) urban sprawl, John Rafferty, 2024https://www.britannica.com/topic/urban-sprawl11) U.K. Fertility Rate 1950-2024, macrotrends.net, 2024https://www.macrotrends.net/countries/GBR/united-kingdom/fertility-rate12) What is RAAC concrete and why is it a safety risk?, BBC News, 2023https://www.bbc.co.uk/news/education-6666923913) Grenfell Tower inquiry: 9 things we now know about the cladding, Tom Symonds, 2021https://www.bbc.co.uk/news/uk-5640343114) 6 Crazy Facts About Tokyo's Population (2021) - Inside the World’s Top Megacity, livejapan.com, 2021https://livejapan.com/en/in-tokyo/in-pref-tokyo/in-tokyo_suburbs/article-a0002533/15) HS2 explained: Why people are fighting the UK’s ‘weak’ and ‘inept’ new railway, Shannon McDonagh, 2021https://www.euronews.com/green/2021/09/13/hs2-explained-why-people-are-fighting-uk-s-weak-and-inept-new-railway16) HS2: What is the route and why is the Manchester link scrapped?, BBC News, 2023https://www.bbc.co.uk/news/uk-1647329617) UK house prices and three decades of decline in the risk‑free real interest rate, David Miles & Victoria Monro, 2019https://www.bankofengland.co.uk/working-paper/2019/uk-house-prices-and-three-decades-of-decline-in-the-risk-free-real-interest-rate18) House price to income ratio in United Kingdom (UK) from 1st quarter 2012 to 3rd quarter 2022, statista.com, 2024https://www.statista.com/statistics/591728/house-price-to-income-ratio-the-uk/19) par excellence, Cambridge Dictionary, 2024https://dictionary.cambridge.org/dictionary/english/par-excellence20) First-time buyer statistics and facts: 2023, Claire Flynn, 2023https://www.money.co.uk/mortgages/first-time-buyer-mortgages/statistics