Although the Nationwide consumer confidence index released today showed overall confidence fell to another new low in October, there are signs that consumers’ confidence in the housing market is returning.

41% of people think that house prices will rise over the next six months, the highest proportion since August 2004, when the annual rate of house price inflation stood at 18.9%. Consequently, the Consumers’ House Price Forecast has risen to 2.9%, from 2.1% last month.

It is likely that recent positive news has boosted confidence in the housing market. The number of mortgage approvals has been creeping up all year and reached 107,000 in September, the highest figure for over a year.

Other reports have suggested more positive house price growth, and this was confirmed by the Nationwide House Price index last week.

The Monetary Policy Committee (MPC) meeting today and tomorrow will be interested to see weak overall consumer confidence alongside greater optimism about house prices.

Recent hawkish speeches by MPC members suggest they are currently placing greater emphasis on inflationary pressures, making it even less likely that base rates will move in November, said the report.

Stuart Bernau, Nationwide’s executive director, said: "After three consecutive months of falls, consumers continue to be gloomy. The main index reached another new low in October, with consumers’ confidence in current conditions particularly badly hit."

"The index peaked in the spring, but since April a series of bad news stories appear to have hit confidence. Job losses at Rover, the London attacks in July, low house price growth and most recently higher petrol prices have all contributed to a summer of gloom which is threatening to extend through the autumn months."

"However, recent positive news about both the number of housing transactions and house price inflation, as well as retail sales, all give indications that better times may lie ahead."