Property hotspot where a 4,000 outlay yields an 80,000 return

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In recent years people in the Scottish east coast town of Montrose have not had much to shout about.

The football team, Montrose FC, has been a permanent fixture in Scotland's lowest league, and the biggest employer, the GlaxoSmithKline pharmaceutical factory, plans to close.

Previously, one of the town's biggest boasts was that it was one of the UK's biggest producers of prescription drugs. After that it claimed to be home to Scotland's widest high street. But now the town has a new, and somewhat unlikely, reason to celebrate: Montrose has enjoyed Britain's biggest property boom.

A Halifax survey showed that the Angus town, with a population of 12,000, had the highest house price increases of anywhere in the UK in 2007. They rose by an average of 39 per cent, from 123,494 in 2006 to 172,156 this year.

Montrose beat even affluent areas such as Henley-on-Thames, in Oxfordshire (a 26 per cent rise) and Southwark, in London, (also 26 per cent).

But what exactly is fuelling the property boom? The town's estate agents, of which there are only a handful on the aforementioned wide, but not exactly bustling, high street, think they have the answer.

John Grimes, director of AMFS Properties, puts the remarkable increases down to people being priced-out of buying in the more popular surrounding areas, and to local people being priced-out by landlords.

"Montrose is only 30 miles from Aberdeen and Dundee and on the main train line, so it's perfect for people who can't afford to buy there," he said. "It's not really a case of prices suddenly going through the roof in Montrose, we are simply catching up with the rest of the country. We are still cheap compared to places nearby; it's just that there isn't as much of a gulf in price as there was before."

Three years ago, Mr Grimes bought a one-bedroom flat with a credit card for 4,000. He sold the property a year later, but said it was now worth nearly 80,000, a near 2,000 per cent jump. He added: "There are examples of the huge increases like that all over the town. Yes, your house may be worth 40 per cent more now than it was last year but houses here are still cheaper than anywhere else in Angus so if you sell it, where do you go?

"People in Montrose could sell their houses and make a profit, but they won't get anywhere better for their money elsewhere."

There is a cloud. Maggie Mooney, of the estate agent T Duncan, said: "Everyone here feels sorry for the youngsters. This was one of the last places where first-time buyers could get on the property ladder. People growing up here would always have thought they would have been able to buy a house here easily, but that is not the case anymore."