Recent house price data from Nationwide, the UK's largestbuilding society, showed the average cost of a home in the UK rose by 1.6%increasing the average price of a home to £160,224. This is the fourthconsecutive month of house prices rises, but with credit still hard to come by,do these recent rises really signal the start of the housing market recovery?

The society said prices were now 3.2% higher than at thebeginning of the year, although they were still 14.4% below their peak inOctober 2007.

Martin Gahbauer, Nationwide's chief economist, said: "Theexceptionally low level of interest rates offers some explanation for why houseprices have not repeated the very sharp falls of 2008." 

The reduction of the Bank of England base rate to just 0.5%meant households who were using around 38% of their take-home pay to servicetheir mortgage debt have seen that figure fall to just 28%, Gahbauersaid. 

The billion pound question we at ukhousing have is when interestrates rise, will we see the dreaded sharp house price falls as the cost ofborrowing increases, or is the bank of England willing to maintain low interest rates low for a few more years (well into the upturn)?

Conversely, if the Bank Of England maintains a low interest ratepolicy, are we inevitably going to see another period of house price inflation,as the wows of the recent past slip into history?

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