House prices in Scotland are rising significantly, in line with the large increases in other parts of the UK.

The average price went up to �73,169 during the second quarter of this year, according to Britain's biggest building society, the Nationwide.

It represents a 12.5% jump over the same period in 2001.

Across the UK, the Nationwide says prices soared in June at an annual rate of nearly 20%, the highest rise for 13 years.

The Bank of England is preparing for a two-day meeting to set interest rates this week.

'Gentle' cooling

It faces calls to raise rates to cool the housing market gently and avoid a crash.

For the first time, the Council of Mortgage Lenders (CML) has urged the bank to put up interest rates.

It has raised its prediction for house price inflation in 2002 to almost twice the rate it was forecasting in March.

The Scottish figures also show that the average price for first-time buyer has risen to �54,589.

Premium prices

For existing owners, the average price for an existing house owner has risen to �81,583.

Hot-spots around Scotland include parts of central Edinburgh and the Holyrood area around the new Scottish Parliament building.

The west end of Glasgow continues to fetch premium prices.

Recent months have seen a move towards locations outside the cities.

Bank of Scotland Group economist Martin Ellis said the market in Scotland was not prone to wild fluctuations.

The market in Scotland is performing well

He said while the economy and housing market had shown "remarkable buoyancy" it was not expected to show sustained price increases in the long term.

Mr Ellis said the housing market was at its most productive level since the 1980s and he was not surprised the Bank of England was considering raising interest rates to keep the housing boom in check.

Low interest rates

"I would not be surprised if the Bank of England pushed up interest rates in the coming months to dampen down consumer demand," he said.

The situation in the south of England was markedly different to that found in Scotland and was more prone to "overheating".

The Scottish housing market had been boosted over the past two years by buoyant growth in the Edinburgh and Glasgow housing markets and by an increase in the service sector, he added.

David Chalmers, of the Dunfermline Building Society, said he believed it was too simplistic to view Scotland as one housing market.

He said the price rise was understandable with low interest rates and a relatively high demand for houses in Scotland, and more generally across the UK.