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UK property prices edge higher

After a period in which the value of British property increased rapidly, the statistics for July showed only a marginal rise in average house prices.

According to Nationwide, the average cost of a home in July in the UK was nearly £189,000. This may have been after a monthly increase of approximately 0.1 per cent, but it should be noted that for the year as a whole, the rise in value had been in excess of 10 per cent.

It has been suggested that the July slowdown was in part the consequence of tougher rules being imposed upon mortgage lending. However, there has been some speculation that the boom in house prices might be nearing its end. Such talk neglected the importance of geographical differences in the housing market, and likewise ignored a key driver of price increases which is the shortage of properties.

As house prices are likely to keep rising, businesses that have connections with the housing market are likely to keep prospering. For example, the demand for wood flooring in Wirral is unlikely to decline.

Robert Gardner, an economist at Nationwide, has said:

“Stamp duty revenues are near the all-time highs recorded in 2007 and 2008, reaching over £10 billion in the 12 months to June 2014.”

Although figures gathered by Land Registry officials have confirmed that there was only a small rise in UK house prices during the month of July, if the national economic recovery continues there should be another period of strong growth. The economist Howard Archer has pointed out that high employment rates should play a role in this context.

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