Scottish house prices reached a new high of £207,877 in July after climbing 11% over the year, according to the latest index from Walker Fraser Steele and Acadata.

The year-on-year increase added £20,550 to the average price tag of a home in Scotland.

Monthly growth was at its highest level since March 2015, with prices up by nearly £6,000 or 2.9% from June to July.

The last time monthly growth ran at such a high level was just prior to the introduction of Scotland’s land and building transaction tax (LBTT) in April 2015.

Acadata senior housing analyst John Tindale says: “One of the main reasons for the current upward movement in prices is a result of the lifestyle changes associated with working from home, which has brought about a shift in housing preferences to larger properties – with space for home working – rather than commuting to-and-from one’s place of work. 

“The demand for larger premises continues to be strong, and for some includes moving to Scotland from London, or from other major cities in the UK and beyond. 

“However, the supply of larger homes in Scotland remains thin, with strong competition for those properties that do come onto the market.

“Last month we noted that the ending of the LBTT tax holiday in March 2021 made little difference to the high-value end of the housing market, with the number of purchases of £750,000-plus homes in June 2021 actually exceeding those of March 2021. 

“We suggested that this was probably due to the level of tax saving being limited to £2,100 in Scotland (compared to a saving of £15,000 in England), which is a relatively small sum in relation to a property costing £750,000 

“The tax holiday was therefore more likely to influence buyer behaviour at lower price levels, with purchases at £250,000 qualifying for the maximum tax savings. 

“With the number of lower-priced sales falling in July, due to the purchase of such homes having been brought forward into the earlier months of the year, this will have had the effect of raising the average price of the properties that were purchased in the month.

Prices reached a mini-peak in March 2021, immediately prior to the ending of the LBTT tax holiday on April 1.

“Average prices then started to fall, as buyers of high-value properties reduced in number.

“However, the reduction in high-value sales only continued through April and May, with June and July seeing a return of the higher-value purchases.

“This was perhaps assisted by those who had decided to move away from buying properties in England, where the threshold on tax savings had reduced to £250,000 at the end of June.”