Rising unemployment `hitting Scottish house prices`

17 November 2008

An increase in unemployment has contributed to falls in Scotland`s house prices, an expert has said.

Responding to the latest quarterly price index, which reveals a four per cent decline in the value of property in the country, Professor Donald MacRae, chief economist at Lloyds TSB Scotland, identified a decline in the labour market as a contributory factor.

According to the index, the average price of a property in Scotland currently stands at £165,398.

Professor MacRae said: "The Scottish economy is entering a significant slowdown with rising claimant unemployment and falling consumer confidence."

He went on to say that, while the number of mortgage products available to consumers has fallen recently, the cost of borrowing has been reduced for many people as a result of cuts made by the Bank of England to the base rate of interest.

In a bid to stimulate the UK`s economy, the Bank`s Monetary Policy Committee (MPC) voted to lower the rate by 150 basis points (1.5 per cent) to three per cent earlier this month.