Big fall in Scottish house prices

The number of houses sold dropped by 43% compared with last year

Scottish house prices have suffered their biggest quarterly fall for at least 16 years, according to research by Lloyds TSB.

The bank's Scottish House Price Monitor showed the average domestic property dropped in value by 4% in the three months to 31 October.

It said the fall was the largest in the 16-year history of the monitor.

House prices have risen by 4.9% overall this year - a big reduction on the 9.3% increase reported last year.

The number of house sales also declined by 43% on the same period last year, the research showed.

Lloyds TSB said the average mix-adjusted Scottish house price was now �165,398.

A spokesman for the bank said: "The market is becoming more differentiated with Glasgow reporting a quarterly rise while Edinburgh, Dundee and Aberdeen all show falls in the quarter.

"Outside the main cities, the south east, excluding Edinburgh, reports a modest quarterly rise while the other areas are all showing quarterly falls."

The spokesman added that flats continued to show the most robust performance, with a quarterly fall of 1.1% and an underlying annual increase of 4.7%.

Sales of these lower-priced properties was continuing to hold up well, the spokesman said, offering some explanation for the quarterly rise in Glasgow prices.

However, prices of detached houses fell by 5.6% in the quarter while prices of semi-detached properties fell by 3.5%.

Professor Donald MacRae, chief economist at Lloyds TSB Scotland, said: "The Scottish economy is entering a significant slowdown with rising claimant unemployment and falling consumer confidence.

"The number of housing transactions has declined markedly since one year ago and the market is adjusting to lower prices and sales.

"Although the number of mortgage products has declined, the cost of borrowing has reduced for many mortgage holders with the latest fall in interest rates in early November.

"So far, the Scottish housing market is showing sensible adjustment rather than a precipitous collapse."

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