Confidence in house price growth high

Confidence in the housing market remains high, with almost two-thirds of people expecting prices to continue to rise - despite increasing evidence of a slow-down.

Just 21 per cent of people predicted they would stagnate, fall in value or even crash, according to the Association of Investment Companies (AIC).

However it was a different story for those who regularly invest money in shares, with only 44 per cent expecting house prices to continue rising, while 48 per cent think they will stagnate or fall.

Meanwhile, 7 per cent of people said they were losing money on property investments either due to falling house prices or because rising interest rates had pushed mortgage repayments above the level of rental income they received.

Annabel Brodie-Smith, communications director at AIC, said: "The general public and active investors' optimism in the housing market could well be misplaced as there is increasing evidence that the housing market is slowing down following five rate rises and the recent credit crunch.

"This research demonstrates that the rate rises are already beginning to hit people's finances and could well undermine future confidence."

The majority of consumers are optimistic about the outlook for commercial property, with 55 per cent expecting it to increase in value, although this fell to 37 per cent among active investors in shares.

But despite people's faith in property only 13 per cent of consumers have money invested in property outside of their own home.

More than half said they did not invest in property because they could not afford to.

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