A July survey of house hunters released today has provided the first indication that the UK housing market is set for a sustained recovery into the autumn.

55% of respondents predicted that house prices would rise over the next twelve months, the third month in a row that a majority of respondents have been positive on the market.

On average, respondents expect prices to remain broadly flat over the next 12 months, rising just 0.2%, and ahead of June’s -0.4% said the report from property website, Propertyfinder.com.

The analysis suggests transactions recorded by November could hit their highest level since May 2004, said the firm.

Jim Buckle, managing director of propertyfinder.com explains: "Three months of sustained confidence will herald a post-summer pick-up in the housing market."

"Now interest rates have been cut and with a further cut expected in the autumn, the market can steadily pull out of the doldrums. We expect transactions to strengthen into the autumn after a normal seasonal summer lull."

"Our survey has proved an excellent predictor of housing market activity. It takes time for house hunter sentiment to be reflected in actual transactions. A potential homebuyer feeling more confident today must now begin the search for a new property so naturally it takes several weeks before any transaction can take place."

Meeting of minds signals greater optimism

The gap between buyers’ and sellers’ forecasts for the housing market was steady in July. This measure is a crucial indicator of the health of the housing market, as a wide disparity between the two groups’ opinions leads to stalemate as sellers hold out for prices that buyers are simply not prepared to pay.

The gap in May, June and July has been significantly narrower than in recent months and further suggests that the housing market is on a firmer footing.

Buyers in July on average made offers 3.5% below the asking price, this compared to 8% below the asking price in April. Sellers are also prepared to accept offers 3.5% below their asking price (compared to 4.5% below in April). With buyers and sellers now closely matched, the prospects for sales to be agreed are much improved.