HOUSE prices will continue to rise in Scotland despite warnings of a cooldown in the market in London, according to the latest evidence from surveyors.
The Royal Institute of Chartered Surveyors in Scotland (RICS) reported an increase in new buyers seeking homes last month as the Bank of England forecast that house price rises in the UK capital would be cut in half in the early months of next year.
RICS said almost half of its surveyors had seen prices rise in the area they worked. This is believed to be due to demand starting to outstrip supply.
The survey suggests that optimism is growing, with 32 per cent of respondents expecting house prices to increase over the next 12 months.
In London, the bank said a cooldown in the UK capital's overheated housing market would begin to take effect next year.
Property values are lifting by around 1 per cent month-on-month, but the bank projects this rate of increase to slow to around 0.5 per cent a month by the first three months of 2015.
Sarah Speirs, Director RICS Scotland, said: "The housing market in Scotland continues to show an imbalance between supply and demand in Scotland and this impacts on prices.
"The independent Scottish Housing Commission published its recommendations to help improve Scotland's housing market, with emphasis on establishing a sufficient quantity and quality of land for housing as a central recommendation."
"With demand from new buyers at the highest rate since December 2013 and fewer properties coming onto the market, there is certainly the need for investment in regeneration and creation of new stock in order to keep prices at a sustainable level."
Graham Tonner of Graham + Sibbald in Dundee, said: "Sale prices in Tayside have been strong. However, there is still not enough stock coming to the market. More sales are at Home Report value compared to the last few years.
The Bank of England couched its predictions in cautious terms, saying: "There is more uncertainty about the path for the housing market in the near term than three months ago."
The strengthening economy, rising consumer confidence, mortgage support schemes such as Help to Buy and widened access to cheap mortgage deals generally have helped the housing market to claw its way back to recovery over the last 18 months or so.
However, in the last couple of months, a string of housing market studies have pointed to some of the strongest heat being taken out of the market.
Toughened mortgage lending rules came into force in April under the Mortgage Market Review (MMR), which force lenders to go into more detail about how mortgage applicants spend their budgets.
Lenders also have to apply "stress tests" to make sure that someone can still afford their mortgage as and when interest rates rise.
The Bank itself has also recently announced new mortgage lending curbs.
These state that loans of 4.5 times a borrower's income or higher should account for no more than 15 per cent of new mortgages issued by lenders.
There has also been speculation over the prospect of interest hikes as the economy recovers, which some reports have suggested could be injecting more caution into buyers' behaviour.
The bank said a cooldown in the UK capital's overheated housing market would begin to take effect next year.