But the bad news is that it is unlikely to ease the plight of first-time buyers trying to get on to the property ladder.

For one-bedroom flats in the city are now changing hands for around £100,000 and the credit squeeze has led to many lenders withdrawing 100 per cent mortgages.

House prices across large parts of the UK appear ready to fall dramatically after years of rapid growth.

But David Ferguson, a partner at J&E Shepherd in Inverness, insists the market in the Highland capital is bucking the trend and returning to a more sustainable level.

He said less than a year ago homes were selling at 15 to 20 per cent above the asking price, but a market slowdown has meant this figure has dropped to around a quarter of this.

Mr Ferguson said: "The remarkable phenomenon witnessed a few years back when lengthy queues of desperate home buyers camped out overnight to snap up new build properties as soon as they came on to the market might have gone but, despite what some doom and gloom merchants might warn, there is ample evidence of underlying confidence in the Inverness housing market.

"That confidence is founded firmly on facts and figures which show that, though the days of homes selling at 15 to 20 percent above the asking price may be gone for the time being.

"Homes in Inverness are typically selling at around 4 or 5 percent over the asking price. Crucially house prices are not falling, but are simply rising at a more sustainable level than a few years ago."

According to Mr Ferguson, decent one bedroom flats in Inverness are currently being sold at around £100,000 – with studio flats presently selling for around £80,000.

But he believes these prices are a result of "excessive demand" for such properties, with first time buyers competing against buy-to-let investors.

He claimed: "Clearly there's little doubt that a one-bedroom flat with a six-figure valuation makes it problematic for first-time buyers to gain a foothold on the first rung of the property market, particularly in the wake of the credit "crisis" which has prompted most High Street banks to withdraw their 100 per cent mortgages over recent weeks.

"Nevertheless, despite this hurdle, demand remains strong from both first time buyers and buy-to-let investors for properties falling within the £75k-£125k price bracket.

"The current edition of the HSPC Property Review has only five properties for sale under £100k in the city, other than a small number of purpose-built retirement flats."

Mr Ferguson said the housing market, in recent years, has benefited from a steady stream of house hunters from south of the border and the central belt seeking to relocate to the Highlands.

But the credit squeeze on home owners in these areas, Mr Ferguson suggests, could help to level the playing field for local people trying to buy who have often lost out at closing dates to the wealthy prospective buyers from these areas.

Mr Ferguson added: "If anything the market is currently going through a long overdue period of normalisation which, rather than a cause for concern, simply means that it is returning to a more sustainable and more stable level of demand."

c.hay@highland-news.co.uk

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