Scots house prices up 11% rise ahead of tax

Properties in Edinburgh's Blackhall area. Picture: Phil Wilkinson/TSPL

The average price paid for a home soared by 11.2 per cent in 12 months to hit £178,930 in March.

By contrast, prices paid south of the Border rose by 5.7 per cent in the same period, according to the latest house price index from Your Move/Acadata.

But report authors cautioned that the surge is unlikely to continue, saying the March figures were partly due to a dash to avoid the new Land and Buildings Transaction Tax (LBTT) and a larger-than-usual volume of purchases at the top end of the market.

The index revealed that 36 homes worth £1 million or more changed hands in March, the highest number ever in a month.

Average prices paid in Scotland rose £9,200, or 5.4 per cent, ahead of the new tax coming into force on 1 April.

The report comes as another set of figures, published by the Office of National Statistics, showed a house price increase of 14.6 per cent in Scotland.

Christine Campbell, regional managing director of Your Move, said: “In what would have been an unimaginable trend just a year ago, house prices are now rising faster in Scotland than in London. In part this is due to a short-term scramble to avoid the new LBTT.

“Yet even before the one-off effect of looming tax changes, Scottish house prices were rising on an annual basis by 6 per cent in February, already on a par with 6.8 per cent south of the Border.

“As prices cool across the rest of Britain, Scotland has seen the opposite trend, with prices accelerating upwards.”

Ms Campbell said the new tax will bring benefits for those buying a home for less than £254,000 as they will have to pay less tax than under the old system.

“But it remains to be seen if this will be quickly countered by higher prices for these properties, as buyers with a little more buying capacity just bid up the average price for these homes,” she added.

Regional patterns point to a “sprint finish” for buyers of the most expensive properties ahead of 1 April. Overall, the number of transactions completed in March was up 29 per cent on February, mainly at the top end of the market.

In Edinburgh, prices paid jumped by £27,240 – more than 10 per cent – within a few weeks, going from under £250,000 in February to £276,636 in March.

Neighbouring East Lothian saw the biggest monthly price surge in percentage terms, up 11.8 per cent. East Dunbartonshire, Inverclyde and Clackmannanshire also saw monthly hikes of around 11 per cent. But John Tindale, senior housing analyst for Acadata, cautioned: “Our house price index is based on the ‘average price paid’ for a house. This is a different concept from that of a change in the price of the ‘average house’.

“Despite our headline figure of a rise in prices of 5.4 per cent in the month, we do not believe that this change applies to the ‘average house’, or for that matter to any single house.”