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House prices set for soft landing

 © The Herald
Originally published: 18.08.2006

SCOTLAND's house price boom is heading for a soft landing, according to Lloyds TSB. It said prices rose over the past quarter, but by nothing like the growth seen in recent years. The bank said the average house sold for £141,338 in the three months through to the end of July, 1.1% more than during the previous quarter.

July saw the 66th consecutive month of house price rises, a five-year spiral that has priced many out of the housing market altogether. Nobody, however, wants the boom to turn to bust. Lloyds TSB's chief economist, Professor Donald MacRae, suggested that the huge growth in single-person households meant there would be steady demand for homes.

"The main driver of the housing market in Scotland remains changes in population. The number of households in Scotland is projected to grow by 11% up to the year 2024. The number of households with one person is expected to exceed those with two or more adults during 2016. The Scottish economy is growing at or above trend level, giving forecast growth in 2006 or around 2%. The Scottish house price boom is subsiding, but gently."

The Lloyds TSB figures show huge differences in trends across the nation. Prices fell in Aberdeen and Dundee during the last quarter, by 2.4% and 0.4% respectively. Annual figures for Aberdeen and Dundee, however, were both up 17%, more than anywhere else . A spokesman for the bank said: "Prices in Aberdeen remain quite volatile in comparison with Glasgow and Edinburgh, which both recorded quarterly and annual rises."

Lloyd TSB's figures show prices up 9% in Glasgow and 15% in Edinburgh over the year through to the end of July. Houses in Edinburgh, the bank found, were still the highest in Scotland. The average home there now costs £186,648. Officials in Glasgow, meanwhile, have confirmed Professor MacRae's predictions of a rising population of singletons, fueling demand for small flats and homes for sale and rent.

Glasgow City Council yesterday said it expected the number of single-person households to jump 20% by 2014 to more than 145,000. That would amount to a 10% increase in the overall number of households, putting pressure on prices and rents. A council report said: "Large house prices (partly due to higher quality) and lower levels of affordability have become a significant feature of the housing market landscape over the last three years. Rapid increases in average house prices have been seen in areas with comparatively low average prices."