House prices fall by £100 a week

The fall brings the average price of a home in the capital to £211,704, down from £216,673 for the same period last year, a drop of just under £5,000 – or almost £100 a week.

The sharpest falls were seen in the middle and bottom of the city market, according to the latest report by the Edinburgh Solicitors’ Property Centre (ESPC).

The price of a detached four-bedroom house in the suburbs has fallen by 8.7 per cent to £381,598 from £417,936. Meanwhile, the value of a one-bedroom flat in the Leith Walk and Easter Road areas is down 14.7 per cent to £99,904 from £117,100 last year.

But some homeowners saw the value of their properties rise, with two-bedroom flats in fashionable Stockbridge and Comely Bank going up by 4.8 per cent to £232,950 from  £222,249 over the same quarter. Analysts said these areas “outperformed the market somewhat” since the credit crunch

ESPC business analyst David Marshall said: “A number of factors including job insecurity, rising food and fuel costs and a general lack of confidence in the economy are having a continuing effect on the market.

“Unemployment is higher than it was and disposable income has been eaten into which means people are spending more on their basic needs, leaving less money available for mortgage repayments.”

He said that raising deposits was proving a barrier for many would-be buyers, especially those wanting to get on the first rung of the property ladder. This has led to the market for one-bedroom flats being one of the hardest hit. Restrictions in mortgage lending meant the buy-to-let market, which had a special interest in such properties, gave a lesser return and was less attractive to purchasers.

Mr Marshall added: “Regional house prices continue to show some volatility due to lower sales volumes but where you see sharper rises or falls, these tend to be offsetting similar movements in the opposite direction a year ago.

“This is also the case when you drill down to specific areas within Edinburgh. The average price of a one-bedroom flat in Leith Walk and Easter Road jumped by 9 per cent between 2010 and 2011 but came down again by 14.7 per cent this year.”

Outside Edinburgh, the volatility of the market was also apparent across the Lothians, with a mixed picture showing that areas which had seen prices rise last year experienced falls this year and vice versa.

East Lothian, which saw an annual rise of 4.2 per cent this year, had seen a decline of 10.6 per cent in 2011. However, Midlothian saw a rise of 11.4 per cent a year ago and fell 7.3 per cent this year.

Alan Ferguson, director of the Chartered Institute of Housing in Scotland, said the current market created winners and losers but was also leading to change in demand for certain tenures such as housing association lets.

He said: “We have a ‘win some, lose some’ situation. But house prices are still quite high for a lot of people.

“What we are also seeing is an increase in some parts of Scotland, such as Edinburgh, Glasgow and Aberdeen, for private lets, including those provided by housing associations.

“This is not a bad thing and private renting may be the answer to the property crisis.”