The average price of a flat in Scotland has risen by 43 per cent in the past ten years – the fastest increase in the UK.
Flats – which often suit single people or couples living together without children – have rocketed in price due to a rise in the number of first-time buyers flooding the market over the past decade, property experts said.
The report from Halifax found the average price of a flat north of the Border had risen to £133,532 since 2004, when the average price was just £95,380.
The average price of all types of properties has risen by just 30 per cent, with flats by far the biggest riser, in both Scotland and the UK as a whole.
Martin Ellis, housing economist at Halifax, said: “There has been a significant increase in the number of first-time buyers since 2010 compared with a modest decline in the number of those moving home. This difference is reflected in a bigger rise in prices over the past five years for those property types that are most popular with first-time buyers: flats and terraces.”
He added: “Since 2009, larger property types – such as detached homes, semis and bungalows – have under performed flats and terraces.
“The demand for such properties has been partly constrained by a widespread lack of equity amongst homeowners who bought for the first time around the peak in the market. Many of these homeowners are still finding it difficult to finance a move to a larger home.”
There are more people living in single person households now in the past, which would account for the increase in the number of people looking for smaller properties such as flats.
However, all property types recorded substantial price falls during the housing market downturn between 2007 and 2009. Terraced houses and flats performed the worst, declining in value by approximately one-third - driven by a tightening of credit which made it difficult for first time buyers to get into the property market. Bungalows and detached homes fared best.
UK-wide, semi-detached and terraced homes have remained the most popular types of property purchased over the past ten years. These two types represent 60 per cent of all home sales in 2014. For first-time buyers, semi-detached homes have risen in popularity, accounting for 29 per cent of purchases in 2014 compared with a quarter in 2004. Detached sales have fallen from 21 per cent of all property sales to just 16 per cent over the past decade.
UK-wide, terraced properties, where prices increased by almost a third, experienced the next biggest rise after flats, but bungalows have seen the smallest gain at just 15 per cent.
In Scotland, however, the trend was reversed - with the price of bungalows rocketing by 36 per cent and terraced properties growing by just 28 per cent.
Mark Hordern, chairman of the Solicitors’ Property Centres (SPC) Scotland said: “Bungalows are indeed hugely popular in Scotland and demand regularly exceeds supply.
“This is partly because of the relatively high proportion of bungalows in sought after locations such as Milngavie and Clarkston areas of Glasgow. Many of these were built between the wars and offer large plots by today’s standards and generous proportions.
“Most have subsequently been the subject of loft conversions and so are no longer true bungalows.”