© The Herald
Originally published: 12.09.2006

House prices in Scotland have risen by nearly 10% in the past year, according to government figures released yesterday.

Scottish properties saw annual growth rates rise to 9.3% from 8.9% with the average home costing £140,460.

It outstrips the UK increase, which saw house prices rise 6% in the year to July, up from 5.3% the previous month according to the Department for Communities and Local Government (DCLG).

A buoyant UK property market saw the average house price reach £194,454, up from £191,016 in June, with detached, semi-detached and terraced homes all increasing in price.

Milan Khatri, of the Royal Institution of Chartered Surveyors (RICS), said: "The acceleration in house price inflation reported by the DCLG for July to a 14-month high confirms that the property market enjoyed a firm rebound during the summer months.

"House price rises for first-time buyer properties fell back in July but are still running above average wage rises, increasing difficulties for would-be buyers."

Average house prices in Scotland increased by 5% during the three months before July.

The most expensive area was Edinburgh and the Lothians, where the average price was £168,914, 5.5% up on the quarter and 9.8% up on the same quarter last year.

The biggest annual increase, 16.7%, was in the Highlands and Islands, where the average house price is now £129,295.

Glasgow remains Scotland's biggest housing market, with sales totalling £1.5bn in the past quarter, 20% up on the corresponding period last year.

The UK house price inflation rate for first-time buyers fell from 6.9% in June to 5.6% in July. Although there was a rise of 0.6% in prices between June and July in the properties bought by first-time buyers, this was less than the larger rise of 1.9% over the same period last year.

The inflation rate for former owner-occupiers rose from 4.8% in June to 6.1% in July. This was due to a rise of 2.2% in prices between June and July in the properties bought by former owner-occupiers compared with a smaller rise of 0.8% over the same period last year.

The average price paid by first-time buyers across the whole of the UK was £150,252 in June. Martin Ellis, Halifax Bank of Scotland chief economist, predicted a cooler period ahead despite the recent rises. It was envisaged large increases in utility bills and higher mortgage rates after the Bank of England's decision to raise its base rate in August would have an impact, he said.

He added: "These developments, combined with the historically high level of house prices relative to average earnings, are expected to constrain housing demand and moderate house price inflation over the remainder of the year."

However, RICS offered evidence from surveyors of further growth which it expected to continue. It said 54% of surveyors reported a rise in prices in July which compared with a rise of 27% in June.

RICS said it believed the rise in interest rates last month to 4.75% would have little impact. New instructions for sales rose at a strong pace for the third consecutive month in July.