City flat prices drop below £100k ceiling

The figure now stands at 99,200, down 10.3 per cent on the same time last year.

The latest figures from Edinburgh Solicitors Property Centre (ESPC) show that prices for one-bed flats in Gorgie and Dalry have also dropped, with the average during April to June standing at 96,313, down from 108,825 at the same time last year.

The average price of a home in Edinburgh stood at 219,530 during the quarter, down from 227,760 on the same time last year. It remains a buyers' market, with almost 70 per cent of properties offered at fixed price going for less than the asking price.

While the drop in prices for one-bed flats might appear to be good news for first-time buyers, Leslie Deans, of Leslie Deans & Co estate agents, said one of the reasons they were dipping in price was because potential buyers were struggling to secure mortgages.

He said: "So many first-time buyers cannot get the mortgage that they require. The banks have paid lip service to the government's wish to make more money available but they're failing to do so. There are stories of first-time buyers being asked for 25,000-30,000 deposits and the vast majority simply do not have access to that kind of money."

Business Analyst for ESPC, David Marshall, said the drop in average prices in the city was largely due to a 9.6 per cent spike in prices last year which was now being reversed, leaving prices still 5.6 per cent higher than they were during the same period in 2009.

However, he expected prices to plateau once they had returned to 2009 levels, rather than go on dropping indefinitely: "I don't think we're likely to see significant decreases on that simply because interest rates are pretty low so the pressure to sell is not that high. So I think we're likely to see a continuation of recent sales levels being about half of pre-credit crunch levels, with prices doing not very much. The obvious qualifier to that is with everything going on in the Eurozone."

The only area of the Lothians to buck the price slide was East Lothian, where the average house price was 226,053, up from 210,521 last year, and 186,860 the previous year.

Mr Marshall said: "I think that's just going to prove to be an anomaly and we'll start to see prices in East Lothian inching back down towards the 200,000 mark, which is where they've been hovering for the last two or three years."

High hopes 'strangling' house sales

SELLERS have been told to be "more realistic" about the value of their properties amid claims that overpriced homes are "strangling" the Scottish market.

The National Association of Estate Agents (NAEA) said it had concerns about the lack of movement in the property market.

It said buyers were often faced with overvalued properties, which are pushing the market further out of reach. The organisation said home reports, which were introduced in 2008, were adding to the problem by "skewing" sellers' expectations.

David Mackie, NAEA Scotland's spokesman said: "Higher valuations don't do anyone any favours. For sellers, their property is unlikely to shift, for buyers, prices will remain prohibitively high, and for selling agents, these unrealistic expectations can cause friction when advice to lower asking prices is offered.

"Licensed NAEA agents have the experience and wherewithal to be able to offer the most comprehensive advice on property prices, and this knowledge is crucial in securing the best deal."