A NEW generation of “sit tighters” is fuelling the biggest rise in house prices Scotland has seen in 30 months.

The phenomenon sees would-be buyers who cannot afford to move up the property ladder holding off putting their own properties up for sale.

Experts believe they are increasingly being put off by the high rates that need to be paid on completion for the Scottish Government’s Stamp Duty replacement.

The Land and Buildings Transaction Tax (LBTT) is thought to have had a marked effect on the housing market since it came into being in 2015.

The tax on properties bought for more than £325,000, but less than £750,000, is 10 per cent, but half that on homes costing from £250,000 to £325,000.

According to experts, as householders‘sit tight’, fewer homes in their price bracket are coming onto the market, sparking price rises for those which do come up for sale.

Previously, it took an average of 12 weeks to sell a house in Scotland’s cities, but figure is now down to nine weeks.

As a result, the average price of a house in Scotland rose by almost five per cent in July, compared to the same month in 2016 to £149,185.

However, Edinburgh has witnessed a near 10 per cent growth in just 12 months and Glasgow, closely behind at six per cent.

The reason for the capital’s near double-digit growth is being put down to the fact that house prices are more expensive, so the ‘sit tight’ syndrome is more noticeable here. The average price in the capital is Scotland’s highest at £243,920.

Experts claim people feel they are unable to move up the ladder, due to a tax bill that would amount to £35,000 on a £500,000 home.

Faisal Choudhry, Scottish Research Director for estate agents, Savills, said: “The Scottish Government needs to do something about LBTT.

“In Edinburgh, fewer properties have come onto the market in the £400,000 bracket than last year.

“So people are staying in their homes for longer because the amount of LBTT they would have to pay is so huge.

“That means people in the £200,000 to £400,000 bracket can’t move up either, because there are so few properties becoming available.

“If the government reconsider LBTT, the Scottish house market could out-perform other parts of the UK.”

Savills say the “premium” market at £500,000 and above has been hit badly by the introduction of LBTT. The tax rate becomes 12 per cent above £750,000.

The cost of the average “premium” property has dropped in the last five years from £572,000 to £554,000.

In Scotland, the tax on a main residential property costing £750,000 is £48,350, compared to just £27,500 in England and Wales, where Stamp Duty still applies.

This price drop heralds the spectre of ‘negative equity’ for those who bought “premium” homes before the introduction of LBTT and now find their property is worth less than they paid.

The July UK House Price Index, published yesterday by Registers of Scotland, showed Scotland’s average house was up 4.8 per cent on July 2016 and 2.8 per cent higher than June this year.

Increases in the average price were detected in 30 of Scotland’s 32 local authority areas. Edinburgh’s 9.6 per cent rise was the country’s highest; Aberdeen showed the greatest drop, at 7.7 per cent to create a new average price in the Granite City of £166,386.

All property types showed an increase in average price in July, when compared with the same month in the previous year. Detached properties saw the biggest, rising by 5.6 per cent to £255,993.

Kenny Crawford of the Registers of Scotland said: “Average prices in Scotland continued their upward trend in July with an increase of 4.8 per cent when compared to July 2016. This represents the biggest percentage increase year-on-year since March 2015.”

Last month the Scottish Government pointed out that since the LBTT came into force, 93 per cent of taxpayers had paid either less tax compared to Stamp Duty or no tax at all. It is monitoring the market.