Property prices in Edinburgh have continued to rise

Figures show that in the three months leading to 31 January 2008, the quarterly index for the average home fell by 1.6%.

The fall is the first in Scotland for seven years.

However Dundee and Edinburgh, and the south west excluding Glasgow, bucked the trend by showing a small rise.

House prices also continued to show an increase annually, despite the quarterly figures.

Annual increases of 30% were seen in Aberdeen, with the north of Scotland, excluding the city, also registering strong rises in the last two quarters.

'Sensible adjustment'

In Dundee annual house prices rose by 20%, in Edinburgh by 18% and in Glasgow by 5%.

However, in other parts of the country, there was evidence of the rate of increase tailing off since spring of last year.

Professor Donald MacRae, chief economist at Lloyds TSB Scotland, said: "Though this is the first quarterly fall in the all-Scotland average house price for seven years, all cities and areas outside cities continue to show an annual underlying price increase.

"The market is showing sensible adjustment after years of price gains above the rate of inflation.

"The prospects for the Scottish housing market are for a plateauing of prices during 2008 following the significant gains in the last five years. The Scottish housing market is pausing for breath."

James Jopling, Shelter Scotland's head of campaigns, claimed that despite the rise many people were unable to afford the average price of �163,000.

"It will take a much bigger correction in prices to make buying a house truly 'affordable' again," he added.