by Joe Quinn© The Herald
Originally published: 24.07.2007

THE average house price in Scotland has crossed the £140,000 mark, according to new figures. But rises are now slowing down as interest rate increases start to bite, according to the Bank of Scotland quarterly house price index.

The survey puts the average price of a house in Scotland at £140,262, which is 29 per cent below the UK average of £196,525.

Edinburgh remains the most expensive place in the country to buy a house, but the biggest annual increases were in Leven in Fife, up 33 per cent to £141,853, and Inverurie in Aberdeenshire, up 32 per cent to £207,540.

The average house in Edinburgh, where prices have gone up by 17 per cent over the year, is now £222,441.

The quarterly rise for Scotland, at 0.6 per cent, was one of the smallest in the UK, said the bank.

It said the average was set to increase by 10 per cent in 2007, more than the expected UK average increase of 6 per cent, and Scotland's relative affordability should see it remain one of the best performers in the UK property market in the near term.

Tim Crawford, group economist at Bank of Scotland, said: "House price growth slowed in Scotland in the second quarter of 2007 as rising interest rates and affordability constraints for first-time buyers tempered demand.

"However, over the past year Scotland has seen the strongest house price growth in Britain, an increase of almost 16 per cent.

"Despite recent price increases Scotland is still the most affordable part of the UK by a wide margin.

"The average house price in Scotland, at £140,262, is almost 29 per cent below the UK average."

Mr Crawford went on: "We expect the Scottish housing market to slow over the rest of 2007 as interest rate rises and affordability constraint make buyers more cautious.

"Prices have risen more than earnings in Scotland in recent years, so a cooling is anticipated. Over 2007 we expected Scottish house prices to increase by 10 per cent, down from 12.5 per cent growth in 2006."