Not even the threat of a Brexit can stop UK house prices from rising

House prices in the UK are on their way up, and none of the arguments to say they should dip seem to be having any effect.

Despite the threat of the UK leaving the EU after the June referendum, tougher rules on buy-to-let mortgages and changes in stamp duty, the number of people reporting a rise in the value of their houses is at its highest point in nearly two years.

According to real estate agents Knight Frank, 5.4% of households said that they planned to buy a property in the next 12 months, up from 5.0% in April.

The firm’s House Price Sentiment Index is above 50 for the 38th consecutive month. More than a quarter of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 3.6% said that prices had fallen, pushing the index to 61.0.

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.

Here’s the chart:

Nothing can stop house prices marching upwards.

A lack of housing, combined with the prospect of ultra-low interest rates being here to stay, are the main factors buoying up the asset class.

Gráinne Gilmore, head of UK residential research at Knight Frank, said: “The steadiness of the headline house price sentiment index during such political uncertainty over the EU is a reflection that the fundamentals of the market remain unchanged — there is still an imbalance between demand and supply of housing, and for those with access to deposit payments, mortgage rates are still near record lows.”

Tim Moore, senior economist at Markit, said market headwinds have been “offset by favourable undercurrents for house prices elsewhere. In particular, the risks of an impending interest rate rise now seem a more distant prospect and ultra-low mortgages have become more widely available.”

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