New hope for house prices

THERE was some good news for Edinburgh's embattled property market today as a leading lender reported average prices in the Capital were back on the increase.

Lloyds TSB Scotland said that the average house price for the sales it handled was 221,491 in the three months to the end of January, up 7.3 per cent on the previous quarter, when the figure was 213,283.

The optimism of the figures contrasts with data from Land Registry records published last week, which showed that house prices in some parts of the Capital had plunged by a quarter since the second half of 2007.

Today's figures are only based on mortgages that Lloyds TSB Scotland has issued over the period – so may be influenced by changing risk approaches by the lender.

A spokesman for the bank would not reveal how many sales were included in the figures, but added: "We are obviously quite a big player, but the number of completions is distinctly reduced on the previous year – about half what we saw in the previous year."

He said the figures were "smoothed" to avoid them being skewed by an unusually large number of expensive properties entering the market in a short period. The spokesman also said he did not think the price rise had been caused by recent interest rate reductions.

"It's still quite early for the market to be reacting to the cuts in interest rates – I think we'll see more of that next quarter. We would think transactions would start to pick up a bit more again now that mortgages are a bit more affordable."

Neil Harrison, marketing and planning manager at the Edinburgh Solicitors Property Centre, also expressed guarded optimism.

"Figures which we reported last week show that the overall market is healthier than most people expected at this point. Our own figures haven't reported any gain to the level of Lloyds but we've obviously been looking at different time periods and our data's not seasonally adjusted.

"The main thing is that the prices are not dropping as much as many people had expected at this point.

"But there's still too much uncertainty about where things are heading to start mentioning words like 'shoots' and 'green'."

The figures released today show that for Lloyds TSB sales, Edinburgh's underlying annual increase in house prices was exactly zero per cent, although this hides peaks and troughs throughout the year.

In Scotland overall, the average domestic property fell by 2.3 per cent in the quarter to give an average Scottish house price of 158,820. The biggest regional drop in house prices during the last quarter came in the Central/Fife/Perth/Tayside region (excluding Dundee), where prices were down 11.8 per cent. The largest increase was in Dundee.

WHO'S GOT IT RIGHT?

HOW Edinburgh's property market is coping with the recession very much depends on who you speak to.

• Last week, Simon Rettie, managing director of Edinburgh-based Rettie & Co, compiled data from an analysis of Land Registry figures – the most accurate as they include all sales – to show the extent of the city's property slump. Among the worst hit were Currie, Juniper Green and Corstorphine, where prices had plunged by nearly a quarter since the second half of 2007.

• The Edinburgh Solicitors Property Centre (ESPC) published figures two days earlier which showed that property prices were still dropping – but the slump was slowing. It said the average price of a city home was 1.2 per cent lower in January than in the same month of 2008.

• The Nationwide building society said last month that house prices in Scotland rose by 0.1 per cent during the last quarter of 2008. Edinburgh was the most expensive area of the country in which to buy, it said, with the average home costing 241,617.

• The city council reported in January that the number of repossessions in the Capital had soared, with 55 houses a week targeted by lenders.