Rise in Scottish house prices brings cheer

Published on Tuesday 6 January 2009 20:49

SCOTLAND'S property market has bucked the UK's downward trend with new figures showing a rise in house prices in the last quarter.

The market north of the Border also recorded the smallest drop in the cost of a home over the past 12 months, an average fall of 8.1 per cent over the year, compared with 14.8 per cent in England and 32.4 per cent in Northern Ireland.

House prices rose by 0.1 per cent in the last quarter of the year – making Scotland the only part of the UK to record a rise between October and December, according to the survey by mortgage lender Nationwide.

The survey also showed Scots to be the most optimistic about the future, with 11 per of cent believing house prices would rise in the next six months.

However, Nationwide said housing market conditions remained volatile.

Its chief economist, Fionnuala Earley, said: "While prices increased by only 0.1 per cent, this follows a fall of 5.1 per cent in the third quarter – larger than the UK average in Q3 – and suggests conditions in Scotland are still somewhat uncertain.''

She said of public confidence: "To the extent that we know the importance of confidence in housing market performance, this bodes well for Scotland."

The average house price in Scotland currently stands at 138,941.

Regionally, the most expensive area in which to buy continues to be Edinburgh, where the average home costs 241,617, while Fife is the most affordable region, with homebuyers spending around 131,565 on average.

The Glasgow Solicitors Property Centre (GSPC) released its quarterly report for the same period yesterday, which showed that prices on the west coast had fallen by an average of 9.5 per cent.

Mark Hordern of the GSPC said: "In Scotland, prices rose very much more slowly than elsewhere in the UK during the boom time, approximately half the pace that they did in London and the South-east. As a consequence, properties here have much less far to fall to get back to normal affordability criteria."

He said that despite having access to the same amount of lending and parity with interest rates, Scots had not taken advantage of the credit available and that this, coupled with the Scottish economy's growth lagging behind the UK's, had led to a less aggressive rise in house prices.

David Marshall, of the Edinburgh Solicitors Property Centre, said of the capital's property market: "The number of households is increasing, so overall demand is increasing, though it has been curtailed severely by lending criteria and that will continue to be the case over the coming months."

Mr Marshall agreed with Mr Hordern that current conditions indicated a "plateauing" of prices was likely by the middle of the year.

Both also agreed that house prices would not start to rise during this year.

Jonathan Fair, chief executive of Homes for Scotland, the organisation which represents companies building 95 per cent of the country's new homes, said: "These figures demonstrate the underlying strength of sentiment within our local housing market.

"This is especially welcome at the start of the new year and, coupled with lower interest rates, bodes well for future performance."