Bank explains UK housing bubble

london-bank-of-england-with-lamp-post-in-foreground

A paper published this month by the Bank of England shows that changes in demographics, lower inflation and a lower long-run real interest rates may explain the build-up of debt and the rise in house prices in the UK between 1987 and 2006.

Figures show household debt and residential house prices in the United Kingdom both grew by more than 50% of income between 1987 and 2006, during which time the inflation rate fell to a low and stable level; long-run real interest rates fell both in the United

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