HOUSE prices in Scotland will grow faster than those in the rest of the UK in the months ahead, according to leading estate agents.
A report by Savills predicts that the value of most property in Scotland will rise by 3.5 per cent this year, compared to 2.5 per cent across the UK as a whole.
It found that the market north of the Border has lagged behind England in recent years due to the fragile economic recovery and lending constraints, but is likely to show a "strong performance" over the course of 2015.
Savills said that 2014 was a year of strong market activity in the country's traditional prime market hotspots such as Edinburgh, Aberdeen and the West End of Glasgow, and that the level of interest would continue this year.
However, they warned that those selling and buying properties worth more than £400,000 will be hampered by the introduction of Land and Buildings Transaction Tax (LBTT), which is introduced from April, and uncertainty in the lead up to the following month's General Election.
The gap between property values in urban hotspots and more rural locations is also expected to widen.
Faisal Choudhry, Savills Head of Research in Scotland said: "Despite the challenges facing the top end, there is a more positive outlook for the Scottish residential property market as a whole, due to the establishment of three important foundations.
"These are the introduction of favourable LBTT rates for the majority of buyers, a dissipation of interest rate fears in the short term and the continuation of gradual economic growth."
Houses prices in Scotland's cities increased by five per cent during the last quarter of 2014 compared to 2013, while values in rural areas fell by 1.5 per cent over the same period.
Key drivers were said to be the number of people relocating to cities because of their jobs and to be close to good schools.
Mr Choudhry added that next year would see the top end of the market pick up as the new tax regime bedded in and political shocks receded into the past.
He said: "Looking further ahead to 2016, we expect more conventional market conditions to prevail, with mainstream market recovery fuelling buyer activity further up the market from next year onwards.
"The prime market is expected to absorb the turbulence of recent political and taxation challenges and to continue the value growth that had been underway prior to the Referendum."
The survey comes as separate figures produced by the Yorkshire and Clydesdale Banks found that confidence in the UK property market has reached a three year high.
The latest Annual Housebuyers Survey by the banks revealed that 24 per cent of people plan to change their current property either by extending or carrying out home improvements, while eight per cent of Scots are planning a move in the next 12 months.
Londoners are most likely to move, with 22 per cent putting up a 'For Sale' sign.
A 'feel-good' factor is also spreading among prospective housesellers, with 44 per cent expecting the value of their home to increase, while 54 per cent think it will remain the same.
Steve Fletcher, Head of Clydesdale and Yorkshire Banks Retail Network, said "We have seen optimism returning to the property market over the last few years and this seems to be growing with more people planning house changes whether it is to move, make home improvements, pay off their mortgage or even help a family member to get onto the property ladder."
Meanwhile, Scottish rents have risen slower than anywhere else in the UK, according to figures released by lettings agents.
Since the last Holyrood election in 2011 the average rent north of the Border has gone up at slightly more than half the rate of those in England and Wales as tenants are spared the fluctuations of more volatile increases elsewhere.
A survey by Your Move, one of Scotland's largest lettings agent networks, found that the typical residential rent in Scotland stands at £536 per month, up from £509 in May 2011.
By contrast, the average residential rent across England and Wales has climbed 9.6per cent since May 2011, according to the latest LSL England & Wales Buy-to-Let Index.
Following a 0.1per cent monthly dip in rental prices during January, the average monthly rent for Scots is just 1.3 per cent (£7) higher than a year ago while south of the border, rents in England and Wales have risen 2.8 per cent year-on-year.
Brian Moran, area lettings director at Your Move, said: "Scottish tenants are having a much smoother ride than their counterparts south of the border."
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