House prices in Scotland rose by 0.2% compared with a one per cent fall in prices across the UK. The average price of a house in Scotland is currently £145,531. This is 25% less than the UK average of £194,893.
Over the last five years house price growth in the region is 99%, while over the last 10 years it is 146%. Greater London prices are now just 2.1 times higher than those in Scotland, compared with three times in the first quarter of 2003.
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Martin Ellis, Chief Economist for Bank of Scotland, said: "The Scottish housing market is the best performing market in the UK. Scottish annual house price inflation is 5.3%, above the UK average increase of 1.1%.
"A key factor driving the increase in house prices in Scotland has been its relative affordability. Scottish house prices continue to be the most affordable in the UK. At £145,531, the average price of a house in Scotland is 25% less than the UK average of £194,893.
"We expect a slowdown in the Scottish housing market in 2008 and predict low single digit house price growth. This would be the smallest rise in Scottish house prices in eight years."
The Chief Economist believes that a number of Scottish borrowers who took out fixed rate mortgages in 2005 and 2006 at very low rates will move onto higher rates as their mortgage term expires this year.
Higher food and energy prices will take up more of Scottish homeowners' income, reducing the amount many householders have to spend on housing.
"These factors are likely to lead to easing house price growth in Scotland in 2008." she said.
(GK/JM)
