A report by a UK building Society has revealed Scotland experienced the highest rate of house price growth and is set to outdo the rest of the country.

The survey by Lloyds TSB found that overall, Scotland has seen its house prices grow at a faster average rate in the past year than anywhere else in the UK, with Aberdeen leading the pack with an impressive 34%. An average Aberdeen home now costs £207,315, well above the Scottish average of £168,559.

A new survey by the Nationwide bank however, is predicting the trend is about to reverse. It foresees annual house prices taking a major slump from its current average level of 9.7% to 0% by this time next year. The 0% rate will mean a real term loss when the inflation rate, currently 2.1%, is entered into the equation.

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Thankfully for the Scots, the Nationwide expects there will be a large regional variation in house price growth in the coming twelve months with Scotland forecast to do best, seeing its house prices continue to rise by a relatively diminutive 4%.

Fionnuala Earley, Nationwide's Chief Economist, said the "momentum" that had kept prices strong in 2007 was now fading. She said: "A slowing economy, tighter credit conditions, stretched affordability for first-time buyers and lower house price expectations appear likely to reduce the level of activity."

"As we move into 2008, economic tailwinds are increasingly being replaced by headwinds," she added.

(DW)