House prices soar to all-time record

£10,000 rise in year as buyers bid to beat new tax

HOUSE prices have risen to a record high – going up by nearly £10,000 in the past year.

New figures show the average house price in Scotland is now £169,742 – far ahead of pre-recession levels.

Prices rocketed by £9,672 in the past 12 months and February saw the largest monthly rise since 2007 as the property market staged a spectacular recovery.

But there are fears the revival may stall as last year’s market was fuelled by soaring numbers of homes changing hands ahead of a new property tax being introduced.

The Scottish Government’s Land and Buildings Transaction Tax (LBTT) came into force on April 1 and will replace the existing system of stamp duty.

The tax, on anyone buying a house worth more than £145,000, has been calibrated to ensure most first- time buyers and people buying smaller homes do better than under the old system. Yet under the new rules, anyone purchasing a house worth more than £ 333,000 – which is the price of a twobedroom bungalow i n some parts of the country – is going to face a higher tax bill.

According to the latest Your Move/Acadata house price index, overall sales soared by 14 per cent in February before the introduction of the tax.

This helped to push average prices to their highest-ever level, with an increase of £2,900 in February alone – the biggest monthly rise for eight years.

Average prices have risen in virtually every local authority area, up 6 per cent on a year ago.

Christine Campbell, regional managing director of property firm Your Move, said: ‘February’s vigorous 1.7 per cent – £2,846 – leap represents the highest monthly jump we’ve witnessed since June 2007, at the height of the housing boom.

‘Average house prices in Scot- land have now reached a new alltime peak of £169,742 – and in terms of individual areas, Edinburgh, Aberdeen, East Lothian and Angus all now join the ranks of the record-breakers.

‘The impressive rise in house prices in February has been influenced by the introduction of the new LBTT in April, as highend buyers sought to complete expensive purchases under the old stamp duty rates. Fifteen properties priced at £1million or more were sold in Scotland during the month of February, compared to only six the previous month.

‘Tactical tax considerations have helped foster price growth in the Scottish housing market and are likely to play a significant role i n the months to come too.

‘Now that the LBTT has come into force, we expect to see a temporary drop- off in the number of properties sold above £750,000 – now liable for the top rate of tax.’

Scotland is already among the least-affordable parts of the UK for people wanting to trade up to a larger home.

At the very top end of the market, someone buying a £1million house will pay £78,350 in LBTT, instead of £43,750 stamp duty, making them £34,600 worse off.

Although critics believe the LBTT rates are unduly harsh, they could have been worse if the SNP had gone ahead with its draft plans unveiled last year.

In October, Finance Secretary John Swinney announced proposals which would have seen all properties costing £250,000 or more subject to at least a 10 per cent tax rate.

But Mr Swinney was wrongfooted last December when Chancellor George Osborne announced a sweeping change to the way stamp duty is charged across the UK, forcing him to tweak his plans for LBTT.

‘Biggest monthly jump since boom’