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HOUSE prices in Scotland are outstripping the rest of the UK with the surge being driven by a boom in the value of property in Edinburgh.

New analysis of the housing market has found that the average cost of a home jumped by almost 8 per cent north of the border compared to just 1 per cent down south.

The burgeoning property market means that the average house price is now £184,850, an increase of more than £13,000 in the last 12 months from £171,614 last March.

House price growth is now at its highest level since March 2008 and the start of the economic downturn.

The data has been revealed by the latest Your Move/Acadata House Price Index, and shows that the housing market has now recovered to a level last seen before the introduction of the Scottish Government’s Land and Buildings Transaction Tax (LBTT), which replaced stamp duty.

Christine Campbell, Your Move managing director in Scotland, said: “The Scottish market goes from strength to strength, with Edinburgh driving growth, but excellent performance found across the country.

“With property in Scotland still very affordable, it is possible this will continue, too.”

House prices in Edinburgh saw a double-digit surge during the past 12 months, rising 14.5 per cent to an average of £288,039 at the end of March.

This is in contrast to London, where prices fell slightly by 2.5 per cent during the same time.

At the top of the market, 62 properties priced at £750,000 or over changed hand in Edinburgh during the first three months of the year, more than double the number last year (24).

John Tindale, senior housing analyst for Acadata said that wealthy house-buyers were returning to the capital after being scared off by the impact of LBTT, which increased the amount due on properties at the higher end of the price scale.

He said: “A recent Royal Mail survey concluded that “Edinburgh is the UK’s most attractive city to live and work in”. The high level of LBTT payable on properties priced in excess of £750k no longer appears to be a strong deterrent to potential purchasers in the Edinburgh area, with the sale of such properties very much on the increase.

“It will be interesting to see if this positivity in the upper echelons of the Edinburgh market is going to have a ripple effect outward to the remainder of Scotland’s housing sector over the next few months.”

Overall, 26 out of 32 local authorities in the country recorded growth in the last year with 10 setting new peak average prices in March.

They include several which saw double digit growth similar to that found in Edinburgh, including Falkirk, which leads the way with annual price growth of 15.4 per cent, and East Renfrewshire, the most expensive area outside Edinburgh where prices grew almost as fast at 13.4 per cent.

Midlothian (10.4 per cent) and the Scottish Borders (12.0 per cent), also saw above average prices as did West Lothian (12.4 per cent) and Fife (11.6 per cent).

House prices increased in Glasgow by 10.5 per cent, while strong growth was also observed in Dumfries and Galloway (10.6 per cent) and Renfrewshire (10.5 per cent).

Acadata said that the strength in the market is a combination of factors that include low interest rates and strong competition among mortgage providers; high employment rates and average weekly earnings that are the third highest of the 12 regions in the UK;

Despite the record increase, house prices in Scotland are still the second-lowest in the UK, meaning that property is more readily affordable north of the border than elsewhere.

Alan Penman, business development manager for Walker Fraser Steele, one of Scotland’s oldest firms of chartered surveyors and part of the LSL group of companies, said: “We should welcome the growth we’re seeing in property prices in Scotland because it reflects a strong economy.

“We shouldn’t be blind to the fact that price increases reflect not just strong demand, but also a pronounced lack of supply in housing, however.”

Source: Herald Scotland

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