House prices in Scotland will see an average increase of four per cent over the course of next year with rents rising by just over two per cent, according to Royal Institution of Chartered Surveyors (RICS) forecasts.

Bolstered by recent changes to Stamp Duty the introduction of Land and Building Transaction Tax and continuing demand and lack of supply of property, RICS expect all parts of the country to see price rises during 2015 at an average of four per cent.

Across the UK, RICS expect all parts of the country to see modest price rises during 2015, at an average of three percent. Meanwhile, the South West, Wales and London will experience the lowest rises with prices increasing by two percent and zero percent respectively.

The growth in rental demand softened in the early part of 2014 as the sales market began to recover across the UK, and potential purchasers took advantage of the ‘Help to Buy’ scheme. However, enquiries to rent property in Scotland 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 pushing upwards over the next twelve months, to a 2.1 per cent increase in rents.

The number of houses taken into possession is expected to have fallen in 2014 to around 23,000, the lowest since 2006. Given the current macroeconomic picture, RICS anticipates that this could decline to below 20,000 over the course of the next twelve months, particularly as around ninety percent of new loans are being taken out on fixed rates, which provide some degree of protection against any adverse interest rate changes.

Sarah Speirs, director 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 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.”

Simon Rubinsohn, RICS chief economist, added: “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 MMR 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.”