House prices in Scotland are predicted to grow at almost twice the rate of those in London during the next five years.  

Estate agents have forecast that the value of the average property north of the border will increase by 25.8 per cent between now and the end of 2028, compared to 14.2% in London.  

This would add around £47,000 onto the value of a typical house, with the Registers of Scotland currently putting the average price of a home at £190,000 in March.  

Estate agents Savills made the prediction after upgrading its forecast based on new economic data.  

Meanwhile, The Halifax found that Scottish property prices rose +1.5% year-on-year, according to its latest House Price Index (HPI). 

Across Britain, property values are expected to have increased by just over a fifth (21.6%) in the next five years, revised from a previous forecast of 17.9%, Savills said. 

The Herald: The housing market is reacting to new interest rates The housing market is reacting to new interest rates (Image: PA)

The revised forecast could mean the average Uk house price in the grows by £61,500, from £285,000 in 2023 to £346,500 by 2028. 

The property firm expects house prices to grow by 2.5% typically during 2024, rather than an expected 3.0% drop which was predicted by the company in early November 2023. 

Savills cautioned that the market remains sensitive to short-term fluctuations in the cost of debt and political uncertainty in the run-up to the general election. 

Housing transactions are forecast by Savills to reach 1.05 million in 2024, slightly up from the 1.01 million it predicted towards the end of last year. 

Lucian Cook, head of residential research at Savills, said: “The outlook for 2024 has improved since our last (November 2023) forecasts as mortgage costs have nudged down slightly and are much less volatile. 

“The outlook for economic growth has also slightly improved, pointing to relatively modest house price growth this year, with greater potential over the following few years.” 

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Mr Cook said that lenders have “fairly aggressively priced in the prospect of cuts in bank base rate, causing buyer confidence, and prices, to recover somewhat”. 

But he cautioned that wider global uncertainties have meant that swap rates, which lenders use to price mortgages, have continued to rise. 

He added: “Consequently, we are unlikely to see a further meaningful fall in mortgage rates this year, with the potential for short-term fluctuations in the cost of debt and house prices.” 

Savills predicted that a stronger economic performance in 2025 and 2026 will support buyers. 

Mr Cook said: “Improving economic performance, combined with steady cuts to the base rate, will open up greater capacity for growth from 2025. 

“But without the previously expected falls at the start of our forecast period, affordability constraints will become a factor towards the end of the five-year period, particularly in the already stretched markets of London and the South East.” 

The Herald: Mortgage lenders say the market is 'finding its feet' Mortgage lenders say the market is 'finding its feet' (Image: PA)

Amanda Bryden, Head of Mortgages at Halifax, said that the housing market was h “finding its feet in an era of higher interest rates.” 

She added: “While there is always much scrutiny of monthly price changes – and a degree of volatility is to be expected given current market conditions – the reality is that average house prices have largely plateaued in the early part of 2024. 

“While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability. Activity and demand is improving, evidenced by greater numbers of mortgage applications so far this year, while at an industry level mortgage approvals have reached their highest point in 18 months. 

“Our recent research also found that buyers are adjusting their expectations, with first-time buyers in particular compensating for higher borrowing costs by targeting smaller properties. We see this reflected in property prices for the first few months of this year, with the value of flats rising most sharply, closing the ‘growth gap’ on bigger properties that’s existed for most of the last four years.” 

Here are Savills’ predictions for house price growth over the five years to 2028: 

– North West, 28.8% 

– Yorkshire and the Humber, 28.2% 

– Wales, 26.4% 

– Scotland, 25.8% 

– North East, 25.2% 

– West Midlands, 23.4% 

– East Midlands, 22.8% 

– South West, 18.7% 

– South East, 18.2% 

– East of England, 18.1%