Housing sentiment high despite rate hike fears

Growing expectations of a base rate hike have failed to dent the public's confidence in the outlook for house prices.

The quarterly Halifax Housing Market Confidence Tracker shows a sharp increase in the number of Britons expecting an interest rate hike in the next 12 months.

This has led to a spike in the number of people who expect mortgage rates to be higher in 12 months’ time.

Halifax’s latest Tracker shows 58% now believe mortgage interest rates will be higher in the next year, up from 48% in Q2.

With annual house price inflation running at 9% and the average house price at £204,674, house price optimism remains high.

Some 68% of Britons now expect the average property price to be higher in 12 months’ time and just 5% expect it to be lower.

Yet there has also been a drop in selling sentiment, with the proportion who believe the next 12 months will be a good time to sell falling from 59% in Q2 to 52%.

Positive selling sentiment is now at its lowest level for a year.

Craig McKinlay, mortgage director, Halifax said: "While economic optimism appears to have tailed off in the last quarter, house prices have continued to increase and the underlying pace of house price growth is strong.

“This has helped to maintain the expectation that house prices will continue to rise, despite more people expecting interest rate rises in the next 12 months.

“The factors behind the upward pressure on house prices include the continued lack of second-hand properties for sale on the market and the availability of low mortgage rates.

"Without an increase in supply it’s likely to mean that house price growth continues to be robust in the short-term, even if interest rates eventually begin to increase.”