by BRIAN DONNELLY© The Herald
Originally published: 19.10.2007

House prices in Scotland continue to rise faster than in the rest of the UK with three places north of the border now recording average prices in excess of £200,000.

Edinburgh, Inverurie and Aberdeen are the most expensive locations for homes in Scotland with Clydebank the most affordable town. While the average cost of a house increased by 14.2% in Scotland in the past year compared with 10.7% in the UK overall, according to the Bank of Scotland research, prices in Scotland are still the most affordable in the UK.

The figures follow criticism yesterday from the Chancellor who accused mortgage lenders of fuelling an "unsustainable" boom in house prices. Alistair Darling predicted a slowdown in the housing market and urged banks and building societies to be more responsible with their lending.

His warning came as figures recorded a sharp fall in UK mortgage lending last month.

Mr Darling said: "An unsustainable house price inflation is not good for individuals, is not good for the economy, so I think it will slow down."

He demanded home loan providers ask "more-searching questions" to prevent borrowers overstretching themselves, as it emerged Scottish property prices were edging towards the UK average. A house now costs £141,158 in Scotland on average, the Quarterly Scottish House Price Index showed.

However, this is still almost one-third lower than across the UK as a whole, where the average price is £198,898.

Inverurie in Aberdeenshire was the biggest riser in Scotland in the past year, with prices increasing 35% to £218,580.

Many use the town as a commuter base for nearby Aberdeen, and experts believe higher prices in the Granite City have produced a ripple effect, pushing up costs in the surrounding area.

Overall, prices in the Aberdeen area have risen around 137% since 2001. Greenock in Inverclyde saw the second-biggest rise in Scotland, with prices increasing 32% to £133,578. The Scottish capital remains the most expensive place to buy a house in Scotland. Prices in Edinburgh rose by 18% to £228,212.

Mr Darling's warning coincided with a report by the International Monetary Fund raising fears of a slump in house prices across Britain similar to that seen in the United States.