The average price of a home in the city fell to £171,995 in September from £191,769 last year, a decrease of more than 10 per cent.
House prices in Scotland have grown by 3.4 per cent in a year, data from Registers of Scotland (RoS) shows, but this was less than half the UK level of 7.7 per cent. The average cost of a Scottish property in September was just over £143,000.
The Orkney Isles enjoyed the highest house price growth across the UK with an increase of 20.6 per cent to stand at £144,000, although statisticians say the low number of transactions in such island areas can lead to volatility.
Aberdeen faced a fall of 10.3 per cent as it continues to deal with the effects of the downturn in the oil and gas industry.
Thousands of oil industry workers have been laid off in the past two years as the global oil price dropped from about $110 barrel in 2014 to about $45 today.
RoS director of commercial services Kenny Crawford said: “The percentage increases in average house prices in Scotland, while below the UK average, have been showing steady growth, with month-on-month increases in every month this year apart from February.
“Average prices have been steadily increasing on a year-on-year basis, too, with only one drop in average price being recorded in the last three years. This was in March of this year.”
The biggest price rise over the last year was in East Renfrewshire which includes affluent commuter suburbs of Glasgow like Clarkston and Giffnock, where the average cost soared by more than 15 per cent to £222,034.
Edinburgh houses are almost twice as expensive as Glasgow, with the average cost of a property in the capital reaching £231,103, compared with £121,430 at the other end of the M8.
The market in Edinburgh remains the most active in Scotland with 1,169 sales in July, followed by Glasgow (992), Fife (606), South Lanarkshire (574) and Highland (446).
All property types showed an increase in average prices when compared with the year before, with detached properties showing the biggest increase of 4.4 per cent to £249,247.
The average Scots house price of £143,006, compares with £217,888 across the UK in the year to September.
In Wales, property values have increased by 4.4 per cent annually, taking the typical house price to £146,388. In Northern Ireland, values have increased by 5.4 per cent annually to reach around £124,093.
The East of England has seen the strongest price growth over the last year, at 12.1 per cent, followed by London, where values have increased by 10.9 per cent.
The ONS said the 7.7 per cent annual increase in house prices continued “the strong growth seen since the end of 2013.”