In the three months to 31 October 2008, the quarterly price index for the average domestic property in Scotland fell by 4.0 per cent to give an average mix adjusted Scottish house price of £165,398. This is the largest quarterly fall in the sixteen year history of the House Price Monitor.
The number of house purchase transactions within the Scottish House Price Monitor has fallen by 43 per cent on the same period last year.
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.
Turning to property types, flats continue to show the most robust performance, with a quarterly fall of 1.1 per cent and an underlying annual increase of 4.7 per cent. The sales of these lower priced properties continue to hold up well and offer some explanation for the quarterly rise in Glasgow prices. Prices of detached houses fell by 5.6 percent in the quarter while prices of semi-detached properties fell by 3.5 per cent.
Professor Donald MacRae, chief economist, 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.
