Recovery in city's housing market is stalling say experts

The Lloyds TSB Scotland house price monitor showed Capital house prices dipped 2.2 per cent in July compared with the same time last year - although that followed an 8.7 per cent rise over the latest quarter.

Analysts today said they expected the price rises to slow by the end of the year as the market stabilises.

Donald McRae, chief economist with Lloyds, said it came as consumer confidence remained "well below" pre-recession levels.

"Retail sales are increasing at an annual rate of 0.8 per cent in July, indicating weak growth in the economy. The number of housing sales has increased for four consecutive months from the low point of February this year. The rise in Scottish house prices identified at the end of 2009 and spring of this year has stopped and has partially reversed. However, activity has picked up from the low levels of the winter months.

"It is clear that recovery from recession in the Scottish housing market has paused."

The average Scottish house price is now 159,217, according to the bank. The highest average was in the Capital at 232,210, followed by Aberdeen at 203,007 and the lowest was in Dundee at 117,455.

Aberdeen recorded the sharpest rise in prices over 12 months to July this year at 11 per cent growth. Dundee recorded a 7.7 per cent growth. Glasgow, however, recorded a 6.7 per cent decrease.

Neil Harrison, marketing manager at ESPC, said his firm had been "surprised" by the double-digit growth nationally.

"Our figures are based on monthly reports. May showed an 11.8 per cent increase, June a 6.5 per cent increase and July an 11.1 per cent increase in house prices. These figures are skewed because more large family homes were selling and inflating the average price. We expect by December the price rise will have stayed the same over the course of 2010.

"At the start of this year we saw more properties come on the market which meant the market swung back in favour of the buyer as there was more choice available."