House prices more than double in last decade

Picture: PA
Picture: PA
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HOUSE prices in Scotland have rocketed by 122 per cent over the past decade, a new report has revealed.

The value of the average property has jumped from £80,876 in 2002 to £179,446 in 2012, which works out at about £190 a week.

The increase is also the biggest in the UK and well above the 72 per cent national average.

According to the report, a large proportion of the increase came in the first part of the decade – between 2002 and 2007 when prices almost doubled – before the property crash of late 2007 to early 2008.

Property experts pointed to Scotland’s relatively moderate price peak and moderate crash compared to the rest of the UK as a reason for its price durability over the past ten years.

Other areas of the UK saw much higher peaks at the height of the market in the middle of the decade, but fell back further as a result of the recession.

“Property prices are recovering from the credit crisis of 2008, but some regions have been affected more,” said Christopher Down, chief executive of Hearthstone Investments, the firm which commissioned the report based on data from the Office for National Statistics.

Outside London, which saw a 79 per cent gain over the period, all of the winners in England – with higher-than-average house price increases – were located in the north, while homes in Wales also performed strongly, with an 80 per cent gain.

Six regions significantly under-performed against the national average in the last ten years.

The east of England had a 60 per cent increase and West Midlands house prices increased by 58 per cent. The biggest loser of all was Northern Ireland where house prices have only risen 40 per cent.

John Boyle, head of research at property firm Rettie & Co, said that Scotland’s increase had been more sustainable and had not plummeted as far as other parts of the UK post-recession.

“Scotland started at a lower base than some other parts of the UK,” he said. “We have never really had a house-price bubble before, even back in the 1980s – I think Scots were generally just prepared to borrow less.”

He added: “However, lending did become too lax and that was one of the factors that caused house prices to go up as sharply as they did in the early part of the decade.”

Analysis by Simon Rubinsohn: ‘No part of UK has emerged unscathed’

I believe these figures do show a reasonable picture of what happened in the early part of the last decade, writes Simon Rubinsohn.

The meat of the gain was really in the first five years which is not a surprise to anyone. The data shows that you would have had something in the region of the 122 per cent increase by 2008, then it has slipped back. There has been a pick up in recent months, although not by a massive amount.

I think the main reason Scotland did well was that it started at a lower base point, but at the same time it did not get the same period of volatility as other areas.

In Scotland – and it is difficult to talk about the whole of Scotland as one – the rise was underpinned by economic activity and although no part of the UK has emerged unscathed from the recession, it is those where the property price rises were based on economic growth which have survived better.

For all the talk of financial services being the eye of the storm, they have ended up with less collateral damage than other industries, which explains some of the story at least for Edinburgh.

• Simon Rubinsohn is chief economist at the Royal Institute of Chartered Surveyors.