HOUSE prices in Scotland's largest city have grown faster than anywhere else in the UK, new research has shown.

The latest Hometrack UK Cities House Price Index found that the price of the average property in Glasgow has increased by more than 5 per cent in the past three months, higher than any other UK city.

This is despite a slow down taking effect in other areas, with house price inflation stalling in London and the South East.

Hometrack's latest data now predicts that the pace property is increasing in value in Scotland will now begin to outstrip that of the UK's more traditional hotspots.

Richard Donnell, Insight Director at Hometrack, said: “In the absence of adverse economic trends impacting employment and mortgage rates, the near-term outlook is for a continued slowdown in London towards mid-single digit growth.

"The slowdown in London being seen across the market is not accounted for by seasonal factors with, weaker demand from home owners and investors as supply grows.

"In contrast, northern regional cities will continue to register stable growth rates as households’ benefit from record low mortgages rates and affordability remains attractive.”

Rising house prices in Glasgow have been put down to the city's low starting point, with the average home costing £115,000 compared to £416,000 in Oxford and £254,500 in Bristol.

The index, which compiles data from 20 cities, found that prices had grown by 3.1 per cent in Edinburgh during the same period.

However, the falling price of oil continues to have its impact on the housing market in Aberdeen, where the year-on-year rate of growth fell 8.0 per cent between July 2015 and last month.

The the most recent Quarterly House Price Statistical Report from the Registers of Scotland shows that the average price of a house sold in Aberdeen between April and June was £210,551, a 6.1 per cent drop from £224,341 in the same period last year.

A separate report by estate agents Strutt and Parker found that the slump was directly linked to the falling price of Brent crude oil from the North Sea, and displays the stark contrast between the fortunes of the property markets in the West and North East.

The firm’s analysis shows that there were just seven registered sales over the £750,000 mark in Aberdeen in the six months to June 2016, while in Aberdeenshire there were four.

Having picked up from lows at the beginning of 2016, Brent crude is expected to remain at around $45 to $50/b for the rest of the year and according to the EIA is forecast to remain similar over 2017.

This pattern has been mirrored as far back as the first quarter of 2014, when the oil price began to slide.

David Strang Steel, partner in Strutt & Parker’s Banchory office, said: “While it is pointing out the obvious to say the oil industry slump has affected the property industry, it is remarkable to see just how closely property sales mirror the oil price when you chart one against the other.

"Whilst we have not proven causality, it is interesting to see that when the price of oil drops the number of sales fall, if not immediately then in the following month or two.

"There has been a major reality check in the north-east property market over the last 12 months and expectations have shifted significantly. The ripple effect is particularly obvious over the £500,000 mark."

However, he said there were reasons for homeowners and prospective buyers in the North east to be a bit more cheerful, adding: “For those confident that the oil price is not going to fall any further, and most believe that the bottom came with the January low of $30/b, then now is actually a good time to buy in the north-east. Crude prices have risen sharply since early August.

"It will be interesting to see how the market responds but I expect to see an upwards lift in property sales to reflect the swing in confidence as oil prices rise. This will ultimately have an effect on house prices.”