Nobody who owns a house in Britain thinks we're in a property bubble - and this could cause a crash

A debate is raging in Britain about whether rocketing house prices, particularly in London, mean we're in a house price bubble.

The latest House Price Sentiment Index (HPSI) from property agent Knight Frank and data company Markit, released on Friday, shows homeowners are confident the current property boom will continue.

Just 4% of the 1,500 households surveyed across the UK said they thought the value of their house went down over the last month and the future HPSI, an indication of whether people think prices will rise over the next year, hit 70.3. Anything above 50 signals an expectation of growth.

November's 70.3 reading is up from 68.7 in October and close to the highest reading this year - people are seriously bullish about the housing market.

You might dismiss this out of hand - of course, people who own houses think the price will go up - but it turns out that the future HPSI is actually a pretty good indicator of where prices are going, as shown by the graph below.

Deutsche Bank recently argued that house price sentiment is actually a surprisingly important price driver in itself that is often overlooked - people expect prices will continue rising, so are more willing to bid up prices to fight for a property they want.

Deutsche Bank argued that this is what will bring the "bubble" crashing down, in London at least. Analyst Sahil Mahtani argued in a recent note that the city's increasing unaffordability means government intervention will soon be necessarily to curb price rises.

And if the government reins in prices, that could have a knock-on effect for price sentiment, removing what Deutsche Bank sees as a key growth driver.

If people aren't confident prices will rise, they'll be less willing to pay the eye-watering prices that we're seeing at the moment. And so we could enter a deflationary house price spiral where the whole house of cards comes crashing down.

Still, whether this will come to pass or not is up for debate. Homeowners in London and the South East - where property prices are exploding - don't seem phased.

Future sentiment in the South East hit a record high of 82.9, while in London it is 78.3 - a slight fall on the prior month but still a very bullish reading.

All of this is bad news for anyone looking to get on the housing ladder anytime soon. A report this week from property agent Savills found that property ownership in Britain is increasingly only affordable for the rich and rising prices are not going to do anything to reverse that trend.