According to the statistics posted by the mortgage lender Nationwide Building Society on Thursday, UK's housing market is apparently showing signs of recovery - with the house prices increasing for the third month in July!

Going by Nationwide's data, house prices for the third month running in July increased 1.3 percent - marking the fourth increase in five months; thereby trimming down the yearly price fall to 6.2 percent, the smallest drop since May last year.

Nationwide said that with the 1.3 percent increase in prices this month, the average cost of a home in the UK rose to 158,871 pounds; which beat the average forecast of a
0.2 percent increase projected by economists in a Bloomberg survey.

In the opinion of Martin Gahbauer, Chief Economist at Nationwide, the much-awaited spring back in prices has essentially resulted from shortage of supply; cramped demand; and historically low interest rates.

Gahbauer remarked: "There is now a reasonable chance prices could end the year slightly higher than where they started. Only a few months ago, such an outcome would have appeared unthinkable.

However, adding that the increase in prices may be difficult to sustain, Gahbauer said: "If prices continue to increase at the rate of the last three months, they will soon rise to levels that would be noticeably out of line with earnings, rents and other fundamental determinants of housing valuations."