The quarterly analysis saw the average property price drop back by 1.6 per cent to £163,211 in the three months to 31 January.
According to the index, strong price increases in the North meant that a negative price adjustment was not wholly unexpected.
Dundee and Edinburgh weathered the storm well, reporting a slight increase between October and January, with pricing faring similarly in the South West.
Property types played a large part in detemining how far prices slipped. Flats remained ever-popular with prices growing by 2.1 per cent, the only type of property to report a rise. Terraced houses lost 3 per cent off their prices, followed by detached homes which saw a 1.3 per cent loss in value.
Despite Lloyds TSB figures, Scottish property remains robust with annual increases ranging from 5 per cent in Glasgow to 30 per cent in Aberdeen.
Professor Donald MacRae, chief economist at Lloyds TSB Scotland, described the price trimming as simply a "sensible adjustment" which will plateau out in 2008.
"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," he said.
“As the total population in Scotland increases with less people per household, people living longer and marital break-ups, the number of households in Scotland is projected to increase over the next 20 years.
"There is enough demand for housing to put owner occupation beyond the current level of 67 per cent."
