That was the conclusion of a report for the Scottish Executive entitled ‘Scottish Housing Market Review: Evidence and Analysis 2007’, which claimed that new build levels, historically high in comparison with the rest of the UK, had fallen back in since 2004.
The result of this fall in supply would create a marketplace which was much similar to the rest of the UK, making it more prone to boom and bust pricing, the report suggested.
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The report said: ‘Scotland has consistently experienced higher rates of new build than the rest of the UK. Moreover, analysis carried out for the 2004 Housing Market Review demonstrated that housing market supply in Scotland has historically been more responsive to market conditions than the rest of the UK. This in part explains why previous Scottish house prices were less cyclical than those in the rest of the UK. There are clear signs, however, that this relatively favourable position has deteriorated.’
It was also warned that with increased migration to Scotland and the changes to family structures creating more households, build levels would have to be much better at gauging market demand if affordability wasn’t to be exacerbated further.
Responding to the report, a spokesperson at Bank of Scotland, said: “The Scottish housing market is built on sound fundamentals and remains solid. The economy north of the Border is also in good shape, with employment high and rising. While affordability is becoming more of an issue as prices continue to rise, the situation is still relatively favourable compared with the rest of the UK. Prices will continue to go up but we are expecting growth to cool over 2007.”
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