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16 July 2014, 06:21
The housing market is strengthening across Scotland with the average property price up 4.3% on last year, according to a new report.
The average cost of a home reached £162,302 in May, marking the longest run of price growth since before the financial crisis, the latest LSL Scotland House Price Index shows.
It is the ninth month in a row that the cost of a house has risen in Scotland, with average prices up in 28 of 32 local authority areas and new price records set in Aberdeenshire (£224,803) and Shetland (£147,940).
First-time buyers are powering the recovery, with the number of flats sold rising 26% in the three months to May and terraced house sales up 22%, compared with the same period the year before.
Donald MacLellan, chairman of chartered surveyors Walker Fraser Steele, part of LSL Property Services, said: "We are now seeing the longest sustained period of price growth in seven years. Prices have not climbed so steadily every month since December 2007.
"Not only this, but growth has put down roots across the country, with 87% of the local authority areas in Scotland enjoying annual average house price rises.''
Despite the annual price rise, sales fell by 3% in May compared with the previous month, at a time of year when transactions usually increase by around 12%.
The market may be adjusting to new rules brought in by the Bank of England's mortgage market review, which involve greater scrutiny of borrowers' income and expenditure, Mr MacLellan said.
Caution in the run up to the independence referendum in September may also be a factor.
Mr MacLellan said: "The only fly in the ointment is a decline in total house sales, dropping 3% from April to May 2014.
"This goes against the historic seasonal trend for this time of year, suggesting that tighter regulations under the mortgage market review have temporarily slowed housing transactions.
"But with recurrent indications that interest rates will rise before the year is out, new record property prices being set and only three months to go before the independence referendum, potential buyers may also be taking heed of caution and delaying purchase decisions until they can be clear what the future holds.
"Whether this monthly blip is symptomatic of a broader turning tide in the housing market remains to be seen, as it is still too early to see the woods for the trees.''
Mr MacLellan said the Help to Buy scheme and further investment into new housing developments would be a "lifeline'' to drive growth in areas such as Glasgow, where house prices dropped 3.1% in the month to May.