Certus Mortgage: Confidence increasing in housing market

Public confidence in the housing market is improving, with it currently higher than any time since September 2007.

This is according to propertyfinder.com’s May survey of confidence in the housing market.

60% of the 2,050 respondents thought house prices would rise by May 2010, with only 32.5% forecasting a fall. 8.5% of respondents thought house prices would be unchanged in 12 months' time.

This is an improvement on April when half of respondents (49.9%) believed house prices would increase in the next 12 months and is the sixth consecutive month of improving confidence.

Propertyfinder.com says the rise in confidence suggests the number of housing transactions is likely to grow. Transactions fell sharply to 24,770 in January (latest data available) 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.

The property site argues this trend should now begin to reverse. There is an 84% correlation between Land Registry transactions and propertyfinder.com’s confidence monitor, indicating that those seeking to buy or sell a property will now be able to do so more quickly. With mortgage approvals also on the up ( 23% in March since the start of 2009), the housing market is picking itself up off the bottom.

Overall, those surveyed predicted house prices will increase 1.3% by May 2010.

Nicholas Leeming, director of propertyfinder.com, said: “A large majority believe the housing recession is 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.

"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.”