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Business as usual for 'steady Scotland'

Jaimie Kanwar

Scotland's property market is set for another good year in 2008...

With today's news of falling house prices from the Royal Institution of Chartered Surveyors, those looking at the housing market may wonder where any good property investment prospects may lie. While too much may be read into one month's figures (bearing in mind, for instance, that Halifax revealed a 1.3 per cent monthly rise in prices for December), the news from Rics will leave many feeling gloomy.

Yet there are still locations, even in a tough year, which perform particularly well. This point was made in the Independent today as it listed the top locations for 2008.

On the face of it, the list may not look too surprising or the explanations for forecasts of success particularly original. East London is tipped to do well because of the pre-Olympic development. Liverpool is poised to benefit from its exposure as the European Capital of Culture, while north Kent may not have any special events taking place but is about to benefit from improved transport links to London.

Outside England, the reasons may be somewhat more subtle. Martin Ellis, chief economist at Halifax, told the paper Wales would do well because of the growing second home market, with prices cheaper than the Cotswolds across the border.

Strong performance

In Scotland, however, it is more of a case of business as usual. Not quite on the scale of the past year - which saw house prices rise ten per cent - but four per cent, as predicted by Nationwide, which is a strong performance in the context of a market predicted to be flat overall.

The business as usual element has two parts. In the first instance, Nationwide chief economist Martin Gahbauer told the paper, "Scotland has enjoyed fewer boom cycles than the rest of the country", to which can be added the lack of any major loss of affordability (the ten per cent rise was from a low base by UK price standards, in contrast to London and the south-east).

Secondly, the business which has driven the north-east economy - oil - will continue to make Aberdeen the hottest hot spot of all, while commuter towns with cheap prices and good transport links to Glasgow and Edinburgh - such as Paisley, Lochgelly and Greenock - will also enjoy rising prices.

Allied Surveyors Scotland also expects Scotland to perform well. Director Grant Robertson said the market would be "reasonably well protected" from the general UK downturn, adding: "I think that we'll see modest, single digit growth - between five and seven per cent is what we're thinking as a company."

Better deals for residents

Mr Robertson, like Mr Gahbauer, saw affordability as an issue in Scotland's favour, with a much kinder ratio of earnings to borrowings. "Our cousins down south tend to borrow proportionally far higher against their income," he commented.

As well as offering a better deal for residents, the market may have some good buy-to-let opportunities; Scottish cities are seen as attractive and are also fee-free places to go to University, the Independent noted.

While Glasgow joins Liverpool and London in being engaged with a big project - in its case the 2014 Commonwealth Games and the urban regeneration project that comes with it - most of Scotland, it seems, is simply able to rely on carrying on as before and enjoying a strong housing market without the major fluctuations of other UK locations. This is something which may soon see a lot of envious eyes peering northward and investors coming in.