Scotland’s housing market continues recovery

House prices in Scotland have risen by almost £2,300 since the end of last year, according to a report.

Picture: PA
Picture: PA

The average home was worth £143,809 in May compared with £141,526 in December.

Prices in Aberdeen hit a record high in May, soaring 5% to £194,202, the report by LSL Property Services and Acadametrics shows.

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The city, along with Edinburgh and Glasgow, is one of several “mortgage micro-climates”, with job opportunities and better wages fuelling regional growth, property experts say.

Alan Penman, of chartered surveyors Walker Fraser Steele, part of the LSL Property Services group, acknowledged that prices dipped slightly overall in April and May, but were up since the end of 2012.

He said: “Compared to the beginning of the year, the outlook is distinctly sunnier. The average house is worth almost £2,300 more than in December.

“Prices haven’t increased as quickly north of the border compared with England, but the increases there are being driven mostly by London.”

Property sales are also improving, with mortgages more readily available, he said.

In the five months to May, sales were 4.4% higher than in the same period last year, according to the report.

The market still has “a long way to go”, with the number of first-time buyers less than half the figure before the 2008 downturn and banks still reluctant to lend to high loan-to-value borrowers, Mr Penman said.

“The finances of many borrowers simply don’t hold up to the strain of saving for a large deposit,” he said.

“Inflation remains high, wage growth remains weak. Many borrowers require additional help to put enough money away for a deposit. When demand slows, house prices follow.”

A surge in the number of first-time buyers is likely to “transform” the market in the future, the report suggests.

“In the first quarter of 2013, loans to first-time buyers were 10% higher than this time last year,” Mr Penman said.

“At the moment, this improvement is focused in the cities, where the majority of first-time buyers are based.

“As government schemes like Help to Buy and Funding for Lending continue to encourage new first-time buyers to the market by supporting their efforts to secure finance, this should grow in impact.

“High demand for Scottish rental property will continue to feed demand for property too.”