RISING house prices in Scotland have driven down affordability for the third year in a row, according to a new report.

The Bank of Scotland’s Affordable Cities Review shows the average Scottish city price has risen by three per cent, from £176,009 in 2015 to its current level of £181,077.

It said average affordability in Scotland had worsened in the last 12 months from 5.25 to 5.36 times the gross average annual earnings – the third successive yearly decline.

The report said that on average, affordability in Scottish cities was now at its lowest level since 2009, but was still 12 per cent lower than the 2008 peak of 6.12 times average earnings – at the height of the last housing market boom.

Over the past eight years, the report said the overall improvement in affordability across Scottish cities had been driven by a combination of an increase in the gross average annual earnings of £3,179 (+10 per cent) and an average house price decline of £6,293 (-3 per cent).

Edinburgh is Scotland’s least affordable city with an average house price of 6.12 times gross average earnings in the capital.

With an average price of £220,099, houses in Edinburgh are more expensive compared with average earnings than in any other Scottish city.

Inverness (6.03), Aberdeen (5.72), Dundee (5.38) and Perth (5.24) make up the top five least affordable cities in Scotland.

The bank said Stirling is Scotland’s most affordable city and the second most affordable in the UK after Londonderry in Northern Ireland. The average property price of £165,658 in Stirling is 4.11 times the gross average annual earnings.

Glasgow is the second most affordable city in Scotland and 10th in the UK, with an average house price of £159,580. That is 5.07 times the gross average annual earnings in the city. The highest house price growth over the past decade and since 2011 has been recorded in Aberdeen. With a gain of 58 per cent it is the only Scottish city to appear in the top 10 UK cities with the highest growth in house prices in fifth place.

According to the bank, this is as a result of rising housing demand due to the strong performance of the oil and gas sector over most of the period.

More recently, Aberdeen has seen a 22 per cent rise since 2011, followed by Dundee (21 per cent), Inverness (20 per cent), Glasgow (16 per cent), Perth (14 per cent), Edinburgh (12 per cent) and Stirling, with four per cent.

Mortgages director at Bank of Scotland, Nicola Noble, said: “The rising house prices over the past three years have resulted in a deterioration in home affordability in Scotland’s cities.

“Although affordability is at the lowest level since 2009, it is still much lower than the height of the last housing market boom in 2008.”

She added: “Aberdeen has recorded Scotland’s highest house price growth over the past decade and more recently during the economic recovery, due to strong performance in the oil and gas sector.”