Housing confidence highest since crunch

Of the 2,050 respondents polled, 60% thought house prices would rise by May 2010, with only 32.5% forecasting a fall, while 8.5% of respondents thought house prices would be unchanged in twelve month's time. The survey shows a healthy rise on April when half of respondents (49.9%) believed house prices would increase in the next twelve months and is the sixth consecutive month of improving confidence.

Propertyfinder said rise in confidence suggested the number of housing transactions was likely to grow. Transactions fell sharply to 24,770 in January according to the Land Registry, the lowest level since records began and 31% lower than the previous month and 80% below their peak in August 2007.

More affordable mortgages were the main reason for optimism, with 31% of home buyers and sellers believing they will drive house price growth. But, the positive sentiments were not wholly shared by first time buyers. First-time buyers expected prices to grow only 0.7% in the next twelve months and only 9% thought mortgages are at an affordable level. Second time buyers were most optimistic, predicting a 5.4% increase in prices by May 2010, followed by property investors who forecasted a 2.5% rise.

Nicholas Leeming, director of Propertyfinder, said a large majority now believed the housing recession was almost at an end.

"Although prices may yet drift a bit lower before beginning their recovery, the worst is now behind us. We should not expect a renewed boom however. The market is still in intensive care and expectations for price growth are very modest - at just 1.3% more or less in line with likely inflation."

He added: "Transactions are much more important than prices - unlocking the log jam and getting people moving again boosts consumer spending and provides business for the legion of trades and professions who depend on house moving and renovations."