Scottish market bucks the trend

The property market in Scotland appears to be bucking the downward trend despite the credit crunch and the mortgage shortage, housing experts say.

Official figures back this up. The latest quarterly survey of UK house prices showed that while the national rate of annual house price inflation is 2.2 per cent, Scotland is speeding ahead at nearly three times the pace on 6.3 per cent.

Market analysts say that although growth in prices will slow dramatically this year most areas in Scotland will still record an increase.

'The figures reflect a housing market that is holding its breath, waiting to see what will happen in the financial markets, but certainly not one heading for a crash. In fact, it is quite the opposite in Scotland,' said Graeme Hartley, director of the Royal Institution of Chartered Surveyors Scotland.

Likewise Andrea Gibson, managing director of myhouseprice.com, said; 'Many headlines relate to the market in England, but in Scotland, while we've seen a slowing down of the market, there hasn't been a dramatic fall in prices. I don't believe the market will crash.'

House price growth in Edinburgh and the Glasgow area is likely to be above the national average. Oil rich Aberdeen is also expected to do well. Average prices rose by 26% last year, thanks to a strong local economy, but growth is expected to drop this year. Dundee is also expected to slow following 18% average rises last year.

Affordability has been a major factor in the situation, according to Nationwide's chief economist, Fionnuala Earley. 'In the past we have alluded to the fact that mortgage affordability is not as stretched in Scotland as in other parts of the UK and this is likely to be the main factor behind the relative resilience of Scottish house prices,' she said.

Buy to let isn't missing out either. According to Diarmid Mackenzie Smith, lettings manager for property agency Rettie & Co, rental demand has started growing in Scotland as a consequence of the credit crunch and the declining availability of mortgages.

'With the effects of the so-called credit crunch, first-time buyers will now come back into the rental sector which will explain the increase in rental demand and signs of rental increases that have recently been experienced,' he said.

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