4% House Price Increase Forecast

House prices in Scotland will increase by 4% next year, a new report predicts.

Continuing demand and lack of supply of property, recent changes to stamp duty and the introduction of the land and building transaction tax will help boost prices, according to the Royal Institution of Chartered Surveyors (RICS) 2015 housing forecast.

It also predicts a 2.1% increase in rents north of the border as demand outstrips supply.

Housing experts hope the market will be boosted by the overhaul of the UK stamp duty system announced by Chancellor George Osborne earlier this month.

Anyone buying a home for less than £937,500 will either pay less tax or the same amount under the new rules, the Treasury said.

But the UK system will be replaced in Scotland from April by the land and buildings transaction tax (LBTT), which will impose higher rates on properties at the top end of the market.

Sarah Speirs, director of RICS Scotland, said: The Scottish Housing Commission report, published earlier this year, highlighted the housing supply deficit and the need for revision around planning, development and delivery of housing in Scotland.

What we need is certainty, clarity and confidence from the Scottish Government to keep us building homes.

The stamp duty reform should encourage a greater number of transactions to underpin public confidence and we hope this will continue with the introduction of land and building transaction tax in April 2015.''

The RICS housing forecast for 2015 looks ahead to the next 12 months across all parts of the housing market, from house prices, sales and rents to repossession levels.

Across the UK, it expects all parts of the country to see modest price rises during 2015, at an average of 3%.

It said that across the UK the number of houses taken into possession could decline to below 20,000 over the course of the next 12 months.

The report found that in Scotland, inquiries to rent property have begun to pick-up once again and comfortably outstrip new supply of rental property from landlords.

As a result, RICS expects rents to continue rising over the next 12 months, to a 2.1% increase.

Simon Rubinsohn, RICS chief economist, said: On a UK level 2014 was a significant year for the property market as a more broadly based recovery took hold.

Help to Buy funding helped to support the turnaround alongside the more positive trend in the wider economy. Although the mortgage market review may now be resulting in mortgage lenders being a little more discriminating in the supply of finance, the recently announced, and long overdue, reform of stamp duty is likely to provide a tonic for the market across many parts of the country, particularly for first-time buyers.

That said, the bigger affordability issue is not going to go away, highlighting just how important it is to speed up the supply pipeline of new homes over the coming years.''