SCOTLAND is likely to escape the worst of the UK housing market slump this year, Britain's biggest mortgage lender has forecast.
Halifax, which with Bank of Scotland forms British banking major HBOS, says this is largely because the Scottish market has traditionally avoided boom-and-bust cycles.
Recently, the mortgage lender shocked the market when it warned that UK housi
ng transactions in 2008 were set to collapse 45 per cent because the market was being squeezed by falling house prices and tougher deposit conditions imposed by capital-strapped banks.
But Martin Ellis, chief economist at Halifax told The Scotsman: "While we think (the transaction decline] will be quite significant in Scotland, we do not see it as being as dramatic or spectacular as in the rest of the UK.
"Scotland has been the best-performing region of the UK this year in this regard and we think it will continue to outperform."
Ellis said Scotland was bound to follow the general downwards mortgages trend "as the same pressures come to bear in all parts of the market".
But he added Scotland was "still likely to be more resilient" as house price rises have been smaller in the past five to ten years, so "affordability in Scotland is less stretched than the rest of the UK".
Mortgage professionals say the health of the market often follows the trend in house prices, as sellers do not like to sell in a falling market.
In the first quarter of 2008, the latest quarter for which figures are available, Halifax announced that Scottish house prices had bucked the trend by edging up 0.2 per cent compared with the previous quarter. UK prices fell 1 per cent in the quarter.
That took the annual rise in Scottish house prices to 5 per cent compared with a 1 per cent rise in the UK.
Ray Boulger, senior technical manager at mortgage broker John Charcol, said: "There is no fresher hard data at present, but I would guess Scotland would hold up better on the transaction front than this near-50 per cent fall being predicted more widely.
"That's because house prices have held up well historically in Scotland in other difficult downturns.
And if Scottish house prices are not as volatile as those in England, then there should also not be the same degree of volatility in transactions this time, either."
The full article contains 409 words and appears in The Scotsman newspaper.
