Scots house prices rise but lag behind rest of UK

HOUSE prices in Scotland rose by more than 4 per cent last year, with the average home now worth more than at the height of the property boom in 2008.

Prospective buyers check out house prices at the ESPC in George Street. Picture: Scott Louden

However, the latest official figures show growth north of the Border lagged behind the rest of the country, which saw a UK-wide increase of 10 per cent.

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The latest House Price Index from the Office for National Statistics shows the average cost of a home was £194,000 in November 2014, up £26,000 from the pre-downturn peak of £168,000 in June 2008.

This followed a continuing drop from the all-time high of £200,000 last summer and a slump in year-on-year rises recorded in previous months.

An increased mood of caution among househunters and speculation over how long interest rates can stay at current record low levels have been suggested as possible causes of a general cooling of the housing market as 2014 came to an end.

Scottish property experts blame a number of key factors,including new UK rules tightening mortgage lending, the Commonwealth Games and September’s independence referendum.

“Arguably the most important has been a growing restriction on mortgage lending,” said Mark Hordern, chairman of Solicitors’ Property Centres Scotland.

“New mortgage rules came into force in April and were later reinforced, making lenders much more cautious.

“When Help to Buy came into effect a lot of lenders offered 90 and 95 per cent mortgages and the market picked up almost instantly.

“But when the new mortgage market rules came into play and the Bank of England got more powers to set caps on lending, the number of lenders offering these deals fell very substantially.

“As far as Scotland is concerned – and the west in particular – there was the Commonwealth Games in Glasgow in July.

“The entire city seemed to take a month-long holiday of sporting revelry. I don’t think anybody thought about moving home at all.

“And there is no doubt there was also some effect from the independence referendum.

“Whether you were an opponent or an advocate made no difference. There was a degree of uncertainty about the outcome, which meant people wanted to stay their hand and see what the result would be.

“We had expected some pick-up in the market afterwards but we never saw that. We think people looked at it and thought since it was already midway through September it was too late to sell up before Christmas.”

Christine Campbell, regional managing director of online estate agency Your Move, said: “The Scottish property market is only just starting to recalibrate after the temporary disruption of the referendum.”

Peter Williams, chairman of research consultancy Acadata, said: “The November figures are perhaps somewhat disappointing but possibly reflect a more balanced view of the market post-referendum.”

In November the cost of an average home stood at £283,000 in England, £171,000 in Wales and £147,000 in Northern Ireland.

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