House prices in the Capital fall for first time this year

HOUSE prices in Edinburgh have fallen for the first time this year, amid signs that the Capital's property market is cooling.

The latest report from the Edinburgh Solicitors Property Centre (ESPC) showed that the average house price in Edinburgh for October stood at 213,718, an annual fall of 3.7 per cent.

The drop, down from 221,875 in October 2009, marked the first annual decrease in Edinburgh since January.

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The ESPC said it expected prices in the Capital would continue to slow in the months ahead, bringing the average house price back to levels seen at the start of 2010.

Analysts suggested that the fall was due to an increase in the proportion of smaller properties sold, with one and two-bedroom properties accounting for 63 per cent of sales in October - up from 58 per cent earlier in the year.

Reports earlier this month based on figures released by the Registers of Scotland suggested the average house price in the Capital had actually risen.

But the ESPC said this was based on sales earlier in the year, when there had been a disproportionate number of large properties being snapped up by buyers, distorting the figures.

David Marshall, business analyst with ESPC said: "The growth we saw in the house prices earlier in the year largely reflected a rise in the proportion of large homes selling, which obviously inflated the average.

"Over the last month or two, we've seen sales of smaller properties increase a little, which has gone some way to reverse that trend and this partially explains the decline in the average house price figure."

The report from the ESPC also highlighted a continued excess of "supply over demand", meaning that the market would continue to favour buyers.

While the number of properties sold in the Capital showed an annual increase for the ninth consecutive month, the increase of 3.2 per cent was the smallest recorded during that time.

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Figures showed that the number of properties available on the market remained around 50 per cent higher than at this point in 2009.

Mr Marshall added: "Growth in sales continued in October but at a much slower rate than we saw earlier in the year, and it's important to note that the number of homes selling is around half that seen at the peak of the market.

"At the same time we have a situation where there are considerably more properties on the market than there were last year.

"Conditions now clearly favour buyers and there is no question that over the last two or three months the average has started to come down again.

"While the number of sales remains comparatively low, there is likely to be some volatility in figures from month to month, but we still expect that the overall trend will be for the average house price to come back to levels seen at the start of 2010 in the months ahead."