The year on year house price growth slowed to -1.7% and LSL expects this to slow further as 2011 increases fail to match those of a year ago.
Richard Sexton, business development director at e.surv, said: “The traditional increase in activity over the summer has pushed up prices but they remain low compared to last year.
“House sales have picked up over the summer as buyers have taken advantage of mortgage lenders offering better loan-to-value products and loosening lending criteria to lower income buyers. But mortgage lending remains painfully depressed, which is hampering the long term rehabilitation of prices.”
Sexton added that the lack of mortgage finance was stifling demand at the bottom of the market and pushed down annual prices.
He said: “Let’s not forget mortgage lending was at its lowest level for two years back in the early part of the spring, and although the market has seen the traditional summer improvement, it is depressed compared to 2010, when the economy was growing faster and consumer confidence was higher.”
Dr Peter Williams, housing market specialist and chairman of Acadametrics, added: “On a monthly basis the average house price in Scotland has risen for the second month in succession, although the quantum of the increase for the month, at 0.4%, is relatively small.
“On an annual basis house prices have fallen by -1.7%, compared with the July figure of -1.5%. This further decline in annual house prices is attributable to the increase in the average house price in August 2010 - this having been at a somewhat higher rate than was experienced in August 2011.
Williams added that in August 2011, lenders were beginning to offer more competitive products, particularly in the buy-to-let market, which stimulated some activity in major cities.
“However there is currently a fear, brought about by the latest Eurozone crisis, that lenders may need to retrench on some of these products as the banks and mortgage companies find it more difficult to raise finance in the open markets.”
