Average House Price Soars 11%
20 May 2015, 10:19
House prices in Scotland have risen at twice the rate of those in England and Wales over the last year, new figures show.
The average cost of a home soared by 11.2% in 12 months to hit £178,930 in March.
By contrast, house prices south of the border rose by 5.7% in the same period, according to the latest house price index from Your Move/Acadata.
But report authors cautioned that the surge is unlikely to continue at a similar pace, saying the March figures were partly due to a dash to avoid the new Land and Buildings Transaction Tax (LBTT) and a larger-than-usual volume of purchases at the top end of the market.
The index revealed that 36 homes worth £1 million or more changed hands in March, the highest number ever in a month.
In that single month, average property prices in Scotland rose £9,200, or 5.4%, ahead of the new tax coming into force on April 1.
Christine Campbell, regional managing director of Your Move, said: "In what would have been an unimaginable trend just a year ago, house prices are now rising faster in Scotland than in London.
"In part this is due to a short-term scramble to avoid the new Land and Buildings Transaction Tax, or the LBTT, put in force by the Scottish Government as of 1 April.
"For the top of the market especially, a pre-deadline rush has boosted the average price paid in March, so the latest surge in prices is unlikely to be sustained to quite the same extent in April under the new regime.
"Yet even before the one-off effect of looming tax changes, Scottish house prices were rising on an annual basis by 6% in February, already on a par with 6.8% south of the border. As prices cool across the rest of Britain, Scotland has seen the opposite trend, with prices accelerating upwards.''
Ms Campbell said the new tax will bring benefits for those buying a home for less than £254,000 as they will have to pay less tax than under the old system.
"But it remains to be seen if this will be quickly countered by higher prices for these properties, as buyers with a little more buying capacity just bid up the average price for these homes,'' she added.
Regional patterns point to the "sprint finish'' for buyers of the most expensive properties ahead of April 1. Overall, the number of transactions completed in March was up 29% on February, mainly at the top end of the market.
In Edinburgh, prices jumped by £27,240 - more than 10% - within a few weeks, going from under £250,000 in February to £276,636 in March.
Neighbouring East Lothian saw the biggest monthly price surge in percentage terms, up 11.8%. East Dunbartonshire, Inverclyde and Clackmannanshire also saw monthly hikes of around 11%.
John Tindale, senior housing analyst for Acadata, added a note of caution to the headline figures.
He said: "Our house price index is based on the 'average price paid' for a house. This is a different concept from that of a change in the price of the 'average house'.
"Despite our headline figure of a rise in prices of 5.4% in the month, we do not believe that this change applies to the 'average house', or for that matter to any single house. Our figures arise from a shift in the pattern of purchases, which in March, for one month only and due to tax considerations, were concentrated more at the top end of the market than usual, resulting in the arithmetic average price paid for a home increasing.''
Ms Campbell said: "This is not a normal market and there will be a comparable bump on the other side, as the new tax takes hold. But there is also an optimistic vibe underlying this turbulent few months for Scotland's property market.''