TAYLOR Woodrow has found that it costs about #3000, or around #3 per square foot, more to build a house in Scotland than in most of the UK outside the M25 orbit round London.

That reflects the shortage of skilled labour and higher transport costs for materials including the timber frames.

Timber framed houses account for around 35% of those built in Scotland, but Taylor Woodrow, which sells about 250 units annually in the country, is moving back to the traditional style.

Labour costs have also been pushed up by the improvement in the construction industry, although Taylor Woodrow still believes there are too many players.

Trading has been variable with some sites, such as Molliesburn, selling out very fast, while Kilmarnock has been dull despite the M74 completion making it an ideal dormitory town for those working in Glasgow.

Nevertheless, housebuilding director Paul Phipps said that the June quarter in the central belt had seen a sharp increase in visits and reservations, although that had yet to work its way through to higher prices. These average #77,000 in Scotland - a far cry from the #350,000 the company gets for a two-bedroom flat at City Quay on the Thames, where even the one-bedroom units go for #260,000.

Demand for these has been strong from overseas buyers as well as from City workers.

With both previous and present governments anticipating the building of 4.4 million houses over the next 20 years, chairman Colin Parsons is concerned that the amount of approved land available is well below the implied build of around 200,000 annually.

Only 60% of local authorities have planning policies in place, and he fears there could be a sharp increase in prices demanded for land with full planning consent.