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House prices and sales rise in Scotland as optimism grows

THE Scottish property market is making "solid progress on all fronts", prompting renewed optimism for the year ahead, according to a report.

THE TOP MOVER: House prices in Aberdeen surged 11% and the average level was a record at £195,740. Flats experienced 35% growth over the last six months. Picture: Paula Fisher

A pick-up in house prices across the country, a swift rise in sales levels and continuing improvements in mortgage conditions are seeing the property market "power on ahead like a freight train", the study found.

The LSL/Acadata Scotland house price index concluded the recovery is now being felt nationwide, with a surge in first-time buyers stirring up activity at the lower end of the market.

But it cautioned that many buyers remain unclear over the direction of the economy in 2014 and said the independence referendum could cause a slowdown as potential buyers delay their home purchase to await the outcome of the vote.

Nevertheless, the latest avail­able figures, for November 2013, point to momentum in the market.

The average house price in Scotland hit £146,238 that month, up £2146 or 1.5% on the previous month, according to the house price index.

The increase, which also represented a rise of 2.6% compared to the same period the previous year, was the largest in a single month since June 2007.

Regional figures for November show monthly prices rose in 25 of the 32 local authority areas.

Analysis of the annual change in house prices showed the highest movement on the mainland was in Aberdeen, up 11% on the year. There, the sale of flats has experienced 35% growth over the last six months, compared to 12 months earlier. This resulted in prices for such properties rising an average £27,000.

For the third successive month, average house prices in Aberdeen set a record level at £195,740.

Annual prices in Aberdeenshire rose 6.7%, Scottish Borders 6.1%, and West Lothian 5.1%. Edinburgh prices rose 3.4% and in Glasgow the increase was 1.5%. In comparison, prices in Inverclyde fell 11.4% and in Stirling by 7.7%.

The Western Isles had the cheapest properties, at an average of £97,864, and on the mainland, prices in North Lanarkshire fell 0.9% in the year to £98,597.

Donald MacLellan, chairman of Walker Fraser Steele Chartered Surveyors, part of LSL Property Services, said: "The property market in Scotland is powering on ahead like a freight train.

"This is down to the vast influx of first-time buyers, who have stirred up activity from the lower realms of the housing market - accelerating the rate of recovery.

"Such momentum means there is cause for renewed optimism in 2014 as the Scottish property market shows it is making solid progress on all fronts.

"More than three-quarters of the country saw price rises in November, showing the recovery has now become nationwide."

Mr MacLellan says the experience for first-time buyers is much better than a year ago, reinforced by Government schemes such as Help To Buy.

There is also an "enticing circle" of mortgage products, low interest rates and higher LTV (loan to value) mortgages, propelling sales volumes from June to November 2013 up by 22%.

But he warned: "However, beneath the surface it is also clear the number of homes on sale falls far short of the level needed to meet demand, which is resulting in climbing house prices.

"The blatant imbalance between the lack of housing supply and the pent-up demand needs to be tackled to allow the market to continue to recover at a sustainable rate."

He said many buyers were "opting to sit tight" amid uncertainty over the future direction of the economy.

He added: "Another obstacle may be the referendum this year on Scottish independence, which could cause a slowdown as potential buyers delay their home purchase to await the outcome."

Malcolm Leslie, of Edinburgh estate agent Strutt & Parker's country department, said the market growth north of the border had been "more muted" than in the UK as a whole, "making Scotland seem like a good investment".

He added: "The cities of Edinburgh and Aberdeen continue to outperform the rest of Scotland. Demand is as diverse as ever and in 2013 we sold to buyers from 15 different countries outside the UK and also 28 properties for over £1 million."

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