Top Of The Scots

It's now widely accepted that the UK housing market has all but ground to a halt. Some believe this is temporary, pessimists believe it will be the beginning of a downward spiral, while others suggest Britain is simply due a fallow period to let things settle down and get back into kilter following years of high inflation in the market. This last view was expressed by Nationwide today, which predicted that over the course of 2007 the country as a whole will have seen house price inflation of 9.7 per cent. In contrast, it predicted, there would be nil growth next year. Explaining this prediction as a balance of the factors which might depress the market against those which might boost it, the building society said the nil growth would be caused by next year seeing a slower economy, less buy-to-let investment, continued affordability issues and tighter post-crunch credit conditions. Nationwide's chief economist Fionnuala Earley stated that the buy-to-let element of this would amount to a removal of the "froth" in the market and warned that "pessimistic sentiment about the sector's prospects should not be exaggerated". She also suggested that there would be at least two and possibly three rate cuts, although this would still leave the base rate higher than before August 2006. However, Ms Earley suggested, perhaps the market actually needed a breather anyway after the years of high inflation. She said: "From a longer-term perspective, a year of flat house prices will contribute more to the future stability of the market than a year of ten per cent inflation and ever worse affordability. Now may well be a good time for price growth to pause for breath." While this may be the national picture, however, the housing market is still tipped to see substantial regional variation. This has already been notable in the recent boom with London, Scotland and Northern Ireland ahead of the pack. London, of course, has benefited from the boom in the city, the popularity of central London property with super-rich foreigners and the high demand for homes. A post-troubles Northern Ireland has enjoyed the economic peace dividend and second homes market for buyers from the booming Republic. It is Scotland, however, which Nationwide tipped as being the best performing market in 2008, with four per cent growth. Ms Earley's explanation was that while Northern Ireland would see a five per cent fall through a market correction and London would balance between factors such as lesser financial market activity on the downside and the pre-Olympics investment on the other, Scotland was "less vulnerable to weaker conditions in the UK market as a whole", possessing the most favourable income to price ratios as it has "not participated as strongly in past boom cycles". In addition, she noted, Aberdeen, the most expensive city to buy in, would still benefit from high oil prices. The Nationwide analysis is broadly shared by Lloyds TSB Scotland, which takes a similarly upbeat view. Analysing the latest Lloyds TSB Scotland house price monitor figures, the bank's chief economist, Professor Donald MacRae said: "The Scottish housing market continues to show robust annual increases in excess of inflation." Regional variation is present within Scotland too, with Aberdeen actually seeing less inflation than the north of the country in the last quarter, as highlanders experienced a 9.6 per cent rise in that time. In contrast, Glasgow has had an annual rise of only six per cent against Aberdeen's 34 per cent. Scotland's largest city may, of course, be boosted in the next few years by the prospect of hosting the 2014 Commonwealth Games, which will be used to help efforts to regenerate its east end in the same way Manchester did before 2002 and London is doing with the Olympics. Professor MacRae went on to predict a "gentle slowing" of prices rather than an "abrupt" one, which would be in line with a prediction of lower growth such as four per cent as opposed to the 14.5 per cent Lloyds TSB has recorded in the last year. All of which may suggest that Scotland, too, may need a breather from the high inflation, but not as much as elsewhere. In today's world Property investment is an excellent investment option especially investment in UK