© The Herald
Originally published: 13.10.2006

HOUSE prices in Scotland have risen at more than twice the rate of the UK average over the past year, according to the Nationwide Building Society's quarterly review.

The cost of an average home rose by £18,000 to £135,846 over the past 12 months. The 15.2% increase compares with an average rise of 6.9% across the UK but Scotland still remains one of the cheapest places to buy a home. The only region of the UK where average house prices are lower is the north of England.

The part of the UK which experienced the highest growth rate over the past year is Northern Ireland, where the average price rose by 33.4%, almost five times faster than the rate for the UK as a whole. Scotland was the region with the second highest growth rate, followed by London, which saw the price of the average home increase by 7.3% to £259,646.

The rise in prices in Scotland over the past 12 months is the equivalent of almost £50 a day compared with an average of £30 a day for the UK as a whole. However, the figure for Scotland as a whole masks wide regional variations.

The continuing growth of the energy sector in Aberdeen had a knock-on effect on house prices, which increased by 21% over the past year. The average price of a home in the city is now £173,447. At the other end of the scale, house prices rose by just 6% in Renfrewshire and Inverclyde, where the average price of a home is now £149,738.

In Glasgow, the annual increase was 9% and the average home now costs £159,029. Meanwhile, Edinburgh saw prices rise at the same rate as in Glasgow and the average price of a home in the capital is now £229,475.

Fionnuala Earley, Nationwide's group economist, said: "House-price growth in Scotland has been gathering momentum. This is the fourth consecutive quarter the annual rate of house price growth has increased. The rapid increase in price means the price of a typical house is now 81% of the UK average compared with only 75% this time last year".

"However, in spite of the rapid increase in prices over the past year, Scotland is still one of the cheapest places to buy a house. Prices in Edinburgh are higher than in many major cities, including Belfast, Cardiff, Leeds, Manchester and some parts of London."

However, the Nationwide figures are based on the building society's own lending and therefore will conflict with figures arrived at using different sources. The areas of London where the average house prices are lower than in Edinburgh are Barking and Dagenham, Havering, Croydon and Bexley.

James Galbraith, of CKD Galbraith, said: "The latest development in Edinburgh may sell at about £500 a square foot compared with £2000 a square foot in Belgravia, so the comparison doesn't work."