Scottish house prices predicted to take years to return to 2007 peak

When house prices south of the Border started plunging 18 months ago, accepted wisdom was that since Scottish property values had risen more steadily, house prices here were insulated from the slump in values seen elsewhere.

That was only partly true, as it happened. The decline in Scottish house prices was delayed, but only marginally less severe. Scottish prices have fallen by 7 per cent since the end of 2007, according to the Nationwide, compared with a decline of 12 per cent in the UK as a whole.

And the outlook isn't promising, according to a report out this week, with the rebound set to lag that elsewhere in the UK.

The researchers at Capital Economics are notoriously bearish about the housing market, but usually right. In June 2008 Capital Economics analyst Roger Bootle warned of a 35 per cent fall in UK prices within three years, and evidence so far suggests he was broadly on the right track.

This year Capital Economics expects UK house prices to plunge a further 10 per cent, with another 10 per cent lopped off values over the following two years. Turning their steely gaze on the Scottish market, they believe that unfavourable demographics and an overdependence on the public sector and the oil and gas sector will suppress house price growth over the coming decade.

The report explained: "As Scotland is one of the regions most dependent on the public sector for jobs, the looming public sector squeeze will have a significant impact on its housing market."

It said that as Scottish house prices typically rise by 0.3 per cent less than the UK each year, a predicted UK growth of 2.5 per cent a year over the next decade (with the correction ending in late 2012-early 2013) points to an annual Scottish house price rise of 2.2 per cent. Historically, Scotland's resilience during downturns has been insufficient to counter- balance its weaker performance in upturns, meaning the housing market north of the Border generally underperforms the UK's – and that is unlikely to change.

If Capital Economics is right, it will be some time before many homeowners in Scotland see the value of their home reach the level of three years ago. Those yet to get into the market will be encouraged, and there is no doubt that values have reached unrealistic levels in recent years. The implications for many homeowners and the wider Scottish economy of such a stagnant housing market are potentially dire, however.

THE deadline for completing online self-assessment tax forms is looming and the tax office has been vocal in warning that anyone failing to file by the end of 31 January will be slapped with a 100 late payment charge. Those who still fail to file after that date could be fined a further 60 a day, said HM Revenue & Customs.

Financial advice website unbiased.co.uk estimates that more than a million forms were submitted late last year. The majority of late payers incurred the 100 charge and thousands had to pay additional charges, such as unpaid tax from previous years.

HMRC will accept some excuses for missing the deadline, such as documents being lost through theft, fire or flood that you can't replace in time, life-threatening illness or the death of a partner shortly before the filing date. But most late payers can expect HMRC to be far more rigorous in applying fines than it is in accounting for its own endless errors.

If you intend to file online and have not registered yet, you must do so at least a week before the deadline, as HMRC needs to send you an activation code by post.