HOUSE prices are continuing to fall in Scotland, in contrast to warnings that the south of England is entering a fresh housing bubble.
Figures released by the Office for National Statistics yesterday show that properties in Scotland have fallen in value by 1.1 per cent over the last year, second only to Northern Ireland.
By contrast, house prices in London are shooting up by 9.4 per cent – one of the highest annual rises recorded since 2010.
The figures confirm London is in a league of its own compared with the entire UK, with the next highest region in terms of house prices, the South-East of England, recording 4 per cent growth.
The influence of London’s economy on the rest of the country means that the average house price increase in the UK now stands at 3.8 per cent, even though every region apart from London and the South-East shows increases lower than that figure.
That was a slight fall on the previous month, the Office for National Statistics said, when prices compared with the rest of the economy were at their highest since records began in 1968.
Scotland’s small drop is consistent with figures over the last year, with prices having been either flat or falling since 2011, according to the ONS.
Meanwhile, the rise in prices in the South-East of England prompted fresh warnings that another housing bubble was being stoked.
“Flat house prices in September reported by the Office for National Statistics will likely do little to ease concerns that we could be headed for a new housing market bubble,” said Howard Archer, the chief UK economist of IHS Global Insight.
Josh Miller, a senior economist at the Royal Institution of Chartered Surveyors, said: “The pace of demand is exceeding that of supply in every part of the country. Clearly the momentum in the market is growing. Help to Buy, Funding for Lending and the clear commitment to keep interest rates low for a long time – all three are having an effect.”
A separate report published today contradicted the ONS figures, suggesting first-time house buyers, buoyed by growing confidence and an improving economy, have helped drive up prices and sales in a “revitalised” property market in Scotland.
The average house price in Scotland hit £144,253 in September, up £952 (0.7 per cent) on the previous month, the report finds.
It represents a rise of £647 (0.5 per cent), compared with September last year, and marks the first time in 32 months that the annual rate of change has been in positive figures.
Sales levels are also at their highest for five years.
The September figures appear in the latest LSL Property Services/Acadata house price index, which shows that the volume of sales in the third quarter of the year is 22 per cent higher than in the same three months of 2012.
Acadata chairman Dr Peter Williams said: “The market has clear evidence of forward momentum, which is easing some of the difficulties that
had built up for homeowners needing to move but where prices had settled too low to make that an easy choice.”