Scotland has seen slow growth in the past year

Whilst prices rose at a modest pace in Scotland as a whole, there were a number of hotspots, with the biggest increases in Stirling (19%), Edinburgh (16%) and Inverness (15%).

Martin Ellis, an economist with the Bank of Scotland, said he expected the gap between growth in the Scottish and UK economies to narrow significantly in the New Year.

He said: "While house prices have risen steadily during 2001, the much slower growth in Scotland's economy compared with the UK as a whole has meant that prices have increased more slowly." he said.

Latest figures show the average price of a house in Scotland in the third quarter of this year was 3.7% higher than the same period in the previous year, at �64,700.

The reduction in mortgage rates to their lowest level since the mid-1950s have helped to stimulate housing demand.

But factors such as deep manufacturing recession have been blamed for the relative weakness of the Scottish economy.

A sharp decline in electronics production, a key part of the Scottish economy, is one of the main factors behind the under performance.

Scotland's economic output - measured by gross domestic product - is predicted to increase in the range of 1% to 1.5% next year, which will narrow the gap with the UK average.

Economists believed the underlying strength of the UK economy would help the Scottish economy to also avoid a recession.

Some modest improvement in growth is expected during the second half of the year as the world economy begins to recover, easing the plight of Scotland's exporters.