Scots house prices race upwards at double UK rate

However, the latest figures from the Bank of Scotland's quarterly house price index show that the cost of a home is surging even higher in outlying areas, a sign perhaps that more buyers are being forced out of the cities by urban prices.

With a 30% rise the two towns which recorded the largest increases in house prices across the nation over the past year were Johnstone in Renfrewshire, and Galashiels in the Borders.

Though the house price trend has seen the gap between Scotland and London narrow over recent years, analysts are predicting a "natural cooling" of the market, leading to a less rampant rise in prices over the course of the year.

The latest figures show prices in Scotland rose by 7.5% in the first three months of the year. But homes are still most affordable in Scotland, some 39% less than the UK average of £192,314.

Edinburgh remained the most expensive place to buy a house in Scotland, with prices up 11% over the year to an average of £205,189. Of the four major Scottish cities, Aberdeen saw the strongest growth, up 24% to £175,523. It was followed by Dundee, which saw a 16% increase to £138,688, then Glasgow (11% to £155,123) and then Edinburgh.

At a council level, East Ayrshire saw the highest house price rises over the year, up 26% to £132,924.

Homes in Greater London were now just over twice the price of those in Scotland, compared with three times higher in 2003. The Bank of Scotland said recent interest rate rises would slow down house price growth north of the border this year.

Tim Crawford, group economist for Bank of Scotland, said: "We would expect recent interest rate rises to have an impact on growth in the housing market in Scotland over the remainder of 2007. These rises will put a squeeze on householders' finances, along with higher council tax bills, causing house price inflation to ease.

"Prices have risen more than earnings in Scotland in recent years, so a natural cooling is anticipated. We are forecasting that house prices will have risen by a more sustainable seven per cent over the course of 2007."

The bank's study also found that for the first time there were now no towns in the UK where the average price was below £100,000 after Lochgelly in Fife, Clydebank and Greenock broke through that barrier over the past year.

The 30% rise seen in Johnstone could be explained by the fact it is 13 miles south-west of Glasgow, and is increasingly seen as an attractive option for commuters. According to local estate agents, the average sale price for a middle-sized home, such as a new mid terrace or semi-detached is around £135,000. Larger properties, such as stone-built four-bedroomed villas, sell for around £225,000, with smaller versions up to £160,000.

Ewan Finlay, who set up Johnstone's first dedicated estate agency in response to the town's growing housing market, said: "Johnstone is undoubtedly on the up. It's been a strong market for the past two years, and the growth is continuing.

"More and more people who live in Glasgow's west end realise they can get better value for money here, selling their flat and buying a good family home, and commuting." He added: "Four years ago, you could park at Johnstone's railway station all day long. Now, you can't get near it for the cars."

Meanwhile, Tory leader Annabel Goldie yesterday warned of the potentially "catastrophic" impact if young families are not given help on to the property ladder. She said action is needed to counter the effect of galloping house prices across the country.

Miss Goldie outlined Conservative proposals to tackle the problems, including new £100m annual local Affordable Homes Trusts and freeing up more land for development.

She said: "The lack of affordable homes is the number one concern of a whole generation of young, working people and families in Scotland. If we don't act now to sort it out, the effect could be catastrophic."