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House prices rise by 11.7% in the year to July

House prices in the UK have risen by 11.7 per cent in the year to July 2014, accelerating from the 10.2 per cent increase recorded in June, official data has revealed.According to the Office for National Statistics, strong gains are being witnessed across the UK, with the biggest rise occurring in the capital. As a result, the average price of a residential property is now at the record level of £272,000.Prices in London increased by 19.1 per cent, while in the south-east they rose by 12.2 per cent and in the east they climbed by 10.6 per cent.The average cost of a house in the capital is now £514,000, while in the north-east, which has the lowest average price, the figure is £156,000.There was a significant rise in the prices paid by first-time buyers - these were 13.5 per cent higher on average than in July 2013. The corresponding figure for owner-occupiers was 10.9 per cent.According to the data, the East Midlands, West Midlands and south-west of England have joined London, the east of England and the south-east of England in climbing above the peak of late 2007 and early 2008.Howard Archer, chief economist at IHS Global Insight, told the Guardian: "Stretched house prices to earnings ratios, the prospect that interest rates will start to rise before long and tighter checking of prospective mortgage borrowers by lenders will likely have some limiting impact on buyer interest."However, he added that we are unlikely to witness a significant tailing off of house price growth due to continuing supply constraints, sustained economic growth, elevated consumer confidence and the prospect of an improvement in earnings growth.News of the recent rise follows the publication of a report by the National Housing Federation revealing the affordability problems posed by soaring property prices.According to its study, home ownership is becoming the preserve of a wealthy elite, as average earners such as nurses and firefighters are increasingly being priced out of the market. 

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