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House price confidence stays high despite rate expectations

House price confidence stays high despite rate expectations

House price confidence remains high, despite expectations of an interest rate rise, according to the Halifax’s quarterly tracker.

The bank said that a sharp increase in the proportion of the British public who are expecting an interest rate rise in the next 12 months has failed to dent confidence in the outlook for house price growth.

Additionally, continued talk over the likely timing of an interest rate rise has seen a spike in the number of people who expect both mortgage and savings rates to be higher in 12 months’ time.

Around 58 per cent now believe mortgage interest rates will be higher in 12 months, compared to 48 per cent in the second quarter.

Halifax said that alongside annual house price inflation running at 9 per cent and the average house price standing at £204,674 - house price optimism remains high, with just 68 per cent of Britons now expecting the average property prices to be higher in 12 months’ time and just 5 per cent expecting it to be lower.

Alongside this, there has been a further fall in the proportion who think it will be a good time to buy in 12 months’ time, from 56 per cent in the second quarter to 53 per cent in the third quarter.

Craig McKinlay, mortgage director at the bank, said that 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.”

Despite the availability of higher loan to value mortgages and the Help to Buy Scheme, raising a deposit is still seen as the number one barrier to buying property, with 57 per cent mentioning this.

The number of people citing rising prices or prices being too high has fallen from 35 per cent to 31 per cent in the last three months, despite the continued increase in house prices.

ruth.gillbe@ft.com