Scottish property market bucks the trend

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by Kay Murchie

Property prices in Scotland recorded price growth of 13% last year - ahead of any other area of the UK, according to estate agent, Knight Frank.

However, this was accompanied by a 16% decline in sales volumes, in line with the rest of the UK.

Research from the Department for Communities and Local Government (DCLG) reflect that of Knight Frank and said prices in Scotland were up 9.7% year-on-year in February.

This compares to 6.7% across the UK as a whole and 3.7% in Northern Ireland.

Knight Frank forecasts that Scotland will experience growth in property price values of 1% this year, compared with an average decline of -3% across the remainder of the UK.

Liam Bailey, head of residential research at Knight Frank, said Scotland’s housing market is proving remarkably robust in the face of the turbulent market conditions affecting the wider UK market.

The area that should see the biggest growth is that which lies equidistance between Edinburgh and Glasgow, especially towns such as Stirling, Dunblane and Falkirk, explained Mr Bailey.

However, we also expect areas closer to Glasgow such as East Kilbride, Hamilton, Paisley and Renfrewshire to benefit from the injection of regeneration investment they have been seeing of late, he continued.

Mr Bailey added against this background, our assessment is that house price inflation in Scotland will average 1% throughout 2008 and will out-perform all other UK regions.

It is believed that property prices will fall across the UK throughout the next 2 years. Analysts, Global Insight, are forecasting falls of 7% with a further fall of 9% next year.

Savills estate agents believe a fall of 10% could be seen this year while a further 15% fall could be noted next year.

However, Knight Frank believes the Scottish property market is likely to be unaffected by the falls.

Mid and lower-priced properties in the £140,000-£180,000 range are likely to perform well, as young professionals and investors compete for affordable properties coming on to the market, concluded Mr Bailey.