Properties in the Capital rose £19,160 (7%) on 2020.
The average Scottish home now costs £207,778 up £16,761 on the 2020 figure of £191,017 according to new data from the Bank of Scotland.
The figures compare average prices for the 12 months to October of each year.
Across Scotland, average house prices climbed by 8.8% in 2021, ahead of the UK increase of 6.2%, with Bathgate, Edinburgh and Livingston all seeing increasing above the UK average.
This was achieved by only 12 other Scottish towns and cities including Dumfries, Kilmarnock, Elgin, Perth, Paisley, Dundee, Aberdeen and Glasgow.
House prices in Motherwell rose at the highest rate in Scotland in 2021.
The North Lanarkshire town recorded the largest increase in both percentage terms at 17.3% and in cash term at £26,103, rising from £151,105 to £177,118.
Motherwell is one of only two towns in Scotland to feature in the top 20 list of places in the UK recording the biggest house price increases, according to Bank of Scotland figures, ranking seventh.
The other was neighbouring Hamilton at number 20, where the average house price rose 13.7% in the past year to £159,176.
Average house prices dropped in two of the Scottish towns included in the study – Airdrie and Coatbridge – compared to seven in 2020.
Airdrie recorded the largest fall, with a drop of 3.8% – £6,023 – to £150,874.
The average cost of a home in Coatbridge dropped 2.3% year on year to £145,880.
Graham Blair, mortgages director at Bank of Scotland, said: “Scottish house prices have enjoyed another bumper year, with growth outperforming the UK average and properties in almost every town now worth more than 12 months ago.
“The feedback we’re getting from customers matches what we see in the data. Prolonged working from home has influenced where people want to live and the type of property they want to own.
“While our major cities continue to be attractive, with commuting now less of a priority, areas that offer more space and better affordability have experienced increasing demand from buyers.”