IT feels like we have been here before, more than once.

House prices are riding high again and any expression of caution about this seems to be met with a fairly bullish response from the likes of the builders and the banks.

In short, it seems we are being told, again, it is all going to be different this time. History has taught us we should be wary, certainly in an economic or financial markets context, of any suggestions of a new paradigm. In most cases, the cycles of boom and bust tend to prevail.

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In this case, the suggestion seems to be that record low UK base rates, and expectations that they will not rise as far or as fast as in previous cycles, are grounds for believing house prices are not at unsustainable levels.

A bit ahead of the 2008 crash, when asked about the high level of house prices and the size of mortgages being advanced, one senior UK banking industry figure hammered home a belief that the supply and demand equation meant the market was firmly supported.

Affordability, which should surely be the more important determinant of house prices, appeared not to be viewed as anything like as crucial a consideration as supply and demand.

The senior banking sector figure argued that, if people wanted a house enough, they would pay up for it. While this argument might hold true to a certain degree, it starts to come unstuck fairly quickly if people are not able to service their monthly mortgage payments.

The plunge in UK base rates in late 2008 and early 2009 took us on to previously untrodden ground.

And, with the economy too weak to withstand a rise in benchmark borrowing costs for now, UK base rates have been stuck at a record low of 0.5 per cent since March 2009.
 

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Clearly, record low base rates make monthly mortgage payments more affordable than in normal times.

And the Bank of England has forecast base rates, when they do eventually rise, are likely to increase more gradually and ultimately by less than in previous cycles.

However, it has emphasised this is a projection rather than a guarantee.

Latest figures from Registers of Scotland show the average residential property price north of the Border in the final quarter of 2015 was £167,734. This was the highest for the final three months of any year since comparable records began in 2003.

From the point of view of the economy and society, it seems far from ideal that the average house price is about six times the median annual salary of £27,710 for full-time employees in Scotland. It is certainly not good for younger people who are struggling to get on the housing ladder and are often already facing major disadvantages in terms of much poorer pension provision than in the past.

In Edinburgh, the average house price was £233,255 in the final quarter of last year. In East Renfrewshire, the average was £231,167 and in Aberdeenshire it was £231,704.

Against this backdrop, much has been made of the amount of “affordable” new houses being built. However, “affordable” in this context surely has a very different meaning from that in the 1990s.

The fact of the matter is that much of the housing is billed as affordable is beyond the reach of many, many people who in decades past could easily have gained a foothold on the housing ladder.

And you can hardly imagine Chancellor George Osborne’s latest idea of a lifetime ISA is going to make much difference in this context.

Mr Osborne, in his Budget speech on Wednesday, proclaimed: “From April 2017, anyone under the age of 40 will be able to open a lifetime ISA and save up to £4,000 each year.

“And for every £4 you save, the government will give you £1. So put in £4,000 and the government will give you £1,000. Every year. Until you’re 50.”

He added: “You don’t have to choose between saving for your first home, or saving for your retirement. With the new lifetime ISA, the Government is giving you money to do both.”

It all sounds so simple.

However, there are a couple of things the Chancellor’s comments rather glossed over. The first is that, even for those accumulating £5,000-a-year in a lifetime ISA, it could take many years to get on the housing ladder.

The second point is that saving £4,000-a-year will be impossible for many people.

Let us not forget that, before the recent muted growth, there were years of decline of average earnings in real terms.

We have also seen a surge in zero-hours contracts, and severe moves to limit public sector pay have affected many hundreds of thousands of people.

Meanwhile, the Office for Budget Responsibility’s latest forecast, published to coincide with Mr Osborne’s Budget, paint a fairly grim picture of the UK economic outlook.

Growth is forecast to be well adrift of the long-term annual average in every year to 2020, which is as far ahead as the OBR has projected.

It is hardly surprising, against this backdrop, that the Federation of Small Businesses is reporting today that member firms’ confidence is at a three-year low and they are projecting business conditions will get worse rather than better.

Given we are in the uncharted territory of record low interest rates, it is difficult to predict exactly what will happen to the housing market from here.

Having said that, any suggestions of a new paradigm should be treated with considerable caution.

And many might think the strength of house prices, particularly in some hotspots, is incongruous with the pretty dismal macroeconomic situation, even if the anaesthetic of record low interest rates is dulling reality for now.