Property group Cala forecast that the UK housing market will stabilise between now and 2007.

Strong demand for residential property in recent years has seen Scottish property prices double in some parts. As a result, Calas pre-tax profits in the year to June 30 2004, is up 35%.

With some fearing that the property market may crash, Cala chairman Geoff Ball believes that the market is simply levelling itself out and should therefore not crash, even if interest rates rise above their current level of 4.75%.

Mr Ball Said: "We have seen a softening in all areas. We will have a couple of years where we go sideways. Life will be harder for us. I dont think Scotland will suffer as much as the south-east of England."