THE growing population will underpin rising house prices for years to come but new financial products, loans and mortgages will be needed for first time buyers, a Bank of England policymaker has warned.

David Miles, one of the Bank’s nine rate-setters, said in an official paper that the desire for space caused by the UK’s rising population would reinforce planning restrictions and make it more difficult for housebuilders to keep up with demand.

As a result, he said in the Daily Telepgraph: “We should anticipate a rising trajectory for real house prices over the longer term.

“This is particularly likely in a country like the UK where population density looks set to rise relatively fast. The model also suggests that the upwards trajectory in house values may ultimately become steeper than the rise in real incomes.”

However, a housing boom would be out of reach for first time buyers, he added, because credit, mortgages, loans and financial products, will remain in short supply. Before the financial crisis, buyers did not need a deposit to secure a mortgage. Since the recession, though, large deposits have become essential.