© The Herald
Originally published: 07.01.2007

Scotland is narrowing the house price gap with the south, according to a study released today. The cost of a home north of the border rose by 12.5% in 2006 compared with a UK average of 9.9%, research by the Bank of Scotland found.

Greater London prices are now 2.3 times higher than those in Scotland, compared with three times higher at the end of 2002.

Scotland's property values have performed better than most analysts expected but they are expecting prices to cool in 2007. Property prices north of the border are forecast to rise by 7% over 2007, outperforming a predicted UK average rise of 4%.

The average cost of a Scottish property is now £126,639, some 32% less than the UK average of £186,954, BoS said.

The largest rise in Scottish house prices over the year occurred in Aberdeen (27%) fuelled by expansion in the oil industry. Kilmarnock and Motherwell both saw increases of 25%. Edinburgh remained the most costly place to buy a house in Scotland, with prices up 12% to an average of £202,941.

Tim Crawford, group economist for the Bank of Scotland, said: "The housing market in Scotland continued to grow at a faster rate than the UK average for the fourth consecutive year in 2006.

"Despite this, Scotland remains the most affordable part of the UK to buy a house with an average house price nearly one-third less than the UK average."

House prices in Glasgow had been expected by some observers to outperform those in Edinburgh last year.

However, the new figures show that while values in Glasgow were up 7% to £148,848, Edinburgh saw a 12% increase to crash through the £200,000 average house price barrier and remain the most expensive town or city to buy a home.

Dundee saw the cost of property jump 21% over the last year to £136,566 and Inverness by 1% to £154,325.

The strongest price rise over the past decade - of 201% - was seen in Musselburgh, near Edinburgh, with average property costs leaping from £57,000 in 1996 to almost £173,000 now.

Lochgelly in Fife was the only surveyed town in the UK to have a house price below £100,000. The survey also reveals that first-time buyers could not afford homes in 42 out of 47 towns (89%) north of the border in 2006.

East Ayrshire recorded the largest rise in prices in local authority areas in the 10 years to 2006, with average values leaping 163% to £128,097.

The Borders saw a 158% rise and South Ayrshire and Midlothian both recorded 153% increases.

Dan Cookson, director of HousePriceReports.com, said: "The performance of the Scottish housing market has been a surprise to most but shows that Scotland is still catching up on the house price boom of some years ago south of the border."