Confidence in the housing market has risen significantly over the past three months, according to the latest quarterly Halifax Housing Market Confidence tracker.

One in four expect house prices to increase by at least 5% in the next 12 months

The tracker reveals that the headline House Price Outlook balance (i.e. the difference between the proportion of people across Britain that expect the average house price to rise rather than fall) stood at +40 in June. This was an increase of 7 percentage points compared with last quarter (+33) and was the highest score on this measure since the tracker began in April 2011.

Martin Ellis, housing economist at Halifax, explained that sentiment regarding the outlook for house prices has improved markedly over the past quarter, continuing the trend seen since late 2012.

He said: “This increase in optimism is partly due to house prices being stronger than expected in the first half of the year. We continue to see a clear north / south divide with significantly higher proportions of people expecting prices to rise in the south than elsewhere in the UK.

“Nonetheless, the market still faces substantial headwinds with, for example, house prices remaining above the historical average in relation to earnings. Such factors are likely to prevent a sharp acceleration in house prices.”

52% of British adults predict the average UK house price will rise over the next year – an increase of 7 percentage points since March and 25 points since June 2012. Londoners are the most optimistic with 73% expecting a rise. Those living in the North West are the least optimistic with 35% of respondents predicting that the average price will rise.

50% of Londoners expect house prices to rise by 5% or more over the next 12 months – double the UK average (24%). This is a substantial increase from 20% in 2013 quarter 1 and 18% a year ago.

The various initiatives designed to stimulate the market such as the funding for lending scheme, New Buy and Help to Buy equity share schemes appear to be working which is encouraging.

Despite this, there has been little change in buying sentiment. There has, however been a marked improvement in sentiment towards selling although the net balance remains against selling. A significantly higher proportion think that it will be a good time for people to buy (57%) than believe that it will be a good time to sell (30%) in the next 12 months.

Now, with the rise in those believing that it will be a good time to sell, 23% believe that it will be a good time to both buy and sell over the coming 12 months. This compares with 16% three months’ ago.

Mentions about being able to afford a deposit increased significantly over the past quarter with 64% of respondents highlighting this as one of the main barriers to buying a home compared with 67% in Q1 2013 The proportion identifying concerns about job security has stayed unchanged at 58%.