Many Britons are becoming more confident about the future of the housing market with the majority expecting house prices to rise over the next year, a new report says.

Three in five people believe that property prices will increase whether they are buying or selling a house, according to housing website Propertyfinder.com.

Previous surveys from November 2004 showed only a quarter of people thought prices would rise.

The website predicts that house prices will "rise modestly" in 2006 with 31 per cent more transactions than the same time last year. The gap between asking prices and offers is also closing.

Propertyfinder.com managing director Jim Buckle said: "Househunter confidence is on the up and although we don’t expect prices to rise strongly, there is no doubt that people are no longer afraid to move.

"The sharp increase in the number of people looking for homes adds further credence to our predictions of more transaction volumes for the new year. More buyer interest means more sales."

The latest house price index from building society Halifax also showed that UK house prices were up by 1.2 per cent last month, with property prices up by 4.7 per cent over the past six months. This has fuelled predicitions that the UK market will pick up in 2006.

Recent Bank of England (BoE) figures for October indicated that the number of mortgage approvals to fund house purchase was 35 per cent higher than in October 2004, the highest level since May last year.