London Briefing:  Nine months ago the Economist added its considerable weight to the campaign for a house price crash, writes Chris Johns.

Several other, far less serious newspapers had been warning for at least a year that a collapse in the housing market was imminent. City analysts and respected research institutions had also joined in.

Such was the clamour and noise level it seemed that some of these people were actually hoping for a house price disaster, not merely forecasting one. At the time, I suggested that things might not turn out to be quite so apocalyptic. Since then, house price inflation has fallen, which is a very good thing, but prices are still rising.

In fact, the housing market is starting to show some early signs of taking off again, with both Halifax bank and, particularly, Nationwide building society reporting sharply higher property prices in February.

The increasingly strident calls for a house price crash sometimes are based on lots of worthy analysis. Ultimately, all such thinking comes back to the fact that the house price to earnings ratio is back to where it was at the time of the last peak in the market; prices subsequently fell 25 per cent.

Now, looking at simple price/earnings ratios in the housing market is as flawed as looking at similar ratios in the stock market.

Here is the Johns theory of house prices. Consider these very stylised facts: years ago, the average house price earnings ratio was about two. Today it is about four. Years ago, average earnings of £100 allowed borrowings of £200 and were spent, 50/50, on mortgages and food, drink etc. So the leverage on the portion of income devoted to the mortgage was four times.

Since then, the amount of income needed for food, drink, etc has fallen (prices have fallen) to £25, leaving £75 available for mortgage servicing. Applying the same leverage, a factor of four, we can now borrow £300. It looks as if overall leverage has risen from two to three, but in reality it hasn't moved. Throw in better availability of credit and lower interest rates: leverage can rise further without causing any undue stress.

But it is a stretch to argue that a leverage factor much in excess of four times income is sustainable over the long haul. Leverage is just a fancy word for debt; an economy carrying that amount of debt is more vulnerable to shocks and disappointments, particularly if unemployment starts to rise.

If this line of thinking results in a relaxed attitude towards house prices, it does not argue for further sharp rises. Indeed, if the market is taking off again, alarm bells will be ringing at the Bank of England, which has signalled in no uncertain terms that it wants the housing market to cool off.

The International Monetary Fund has issued another Economist-style warning about UK prices, which will galvanise officials at the bank even further. The more house prices rise, the more likely is it that we will see further, potentially aggressive, action from the central bank. Interest rates could rise again next month.

But why is the housing market taking off again? It could be that a simple old-fashioned bubble, utterly unconnected with economic fundamentals, is inflating. Or it might have something to do with renewed economic growth and, in particular, confidence about jobs. Even if the rise is fundamentally based, those of us who have been optimistic about the housing market will be hoping that prices don't rise too much further - the more they go up, the more likely they will come down with a bump.