The average property price for 2023 reached £287,105, surpassing economists’ forecasts and reflecting a year-on-year increase of 1.7%, equivalent to almost £5,000 more than the previous year.

While a shortage of properties on the market appears to be a driving factor behind the unexpected surge, it contrasts sharply with initial predictions of a 5-10% decline in house prices for the year. In Scotland, property prices increased by 2.6% to an average of £205,170, contributing to the overall positive trend in the UK market.

The resilience in Scotland’s property prices aligns with the broader UK market, showing signs of stabilisation after a downturn triggered by increased mortgage rates.

Experts have suggested that the recent drop in mortgage rates has played a pivotal role in translating into renewed increases in house prices.

Despite the uncertainty brought about by economic conditions, financial markets are optimistic about the limited likelihood of central banks, including the Bank of England, significantly raising interest rates. Mortgage lenders have responded by reducing rates, and there is anticipation of government support for first-time buyers before the general election.

Kim Kinnaird, director of Halifax Mortgages, is cautiously optimistic about the future.

Ms Kinnaird said: “While wage growth is now above inflation, helping to ease cost of living pressures for some and improving housing affordability, interest rates are likely to remain elevated for as long as inflation remains markedly above the Bank of England’s target.

“Our latest forecast suggests house prices could fall between -2% and -4% during the coming year, although, as with recent years, forecast uncertainty remains high given the current economic climate.”