Shock as city house prices fall 12%

HOUSE prices in Edinburgh have fallen by nearly 12 per cent in the last three months, it was revealed today.

The Capital's poor performance came as a surprise and goes against the trend of a modest house price recovery in the rest of Scotland, which has seen the average cost of home rise by 0.7 per cent in the last quarter.

The average home in Scotland now costs 153,605, compared with 152,561 three months ago, according to figures contained in the latest Scottish House Price Monitor by Lloyds TSB.

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The report said: "Scottish house prices have stopped falling and have begun to increase. However, price movements in the latest quarter are particularly volatile."

Nowhere has this volatility been more apparent than in Edinburgh.

Despite the 12 per cent drop, Edinburgh house prices remain the most expensive in Scotland, with the average price of a home in the city costing 197,018.

Leslie Deans, senior partner in Leslie Deans & Co estate agents, acknowledged the number of houses being sold in Edinburgh had fallen steeply in the economic downturn, but said the picture on the ground looked slightly different from the figures contained in the report.

He said: "The ESPC's (Edinburgh Solicitors Property Centre] latest report indicated that Edinburgh house prices have actually stabilised following the recent difficulties so the Lloyds TSB report is running slightly contrary to that.

"Edinburgh was starting from a higher point than the majority of the country and I'm seeing Edinburgh house prices hardening again.

"I'm seeing greater demand. There are more buyers about and more transactions happening. The length of time taken to sell a house is also shortening."

Mr Deans said he had also seen evidence of Edinburgh buyers rushing through transactions before a change in stamp duty rules on December 31.

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He added: "Stamp duty is currently only payable on properties of 175,000, but as of next month they will be payable on properties over 125,000, so I've seen evidence of buyers getting their skates on to close the deal before this rule takes effect.

"All of these factors means that from our point of view the activity level has been quite high.

"However, I wouldn't say things are going well for us just yet.

"Edinburgh property transactions by volume dropped considerably in the downturn and have to bounce back to anywhere near the pre-downturn levels.

"While things have improved over the last six months there's still a bit to go yet."

There were marked differences in price changes across the country, with rises in some areas and falls in others.

Aberdeen saw the biggest rise, with prices going up 13.4 per cent in the last quarter, and the north of Scotland as a whole experiencing a positive trend.

In Glasgow, however, prices fell by 9.8 per cent.

The north, excluding Aberdeen, has seen a 6.9 per cent rise, and the south-east, excluding Edinburgh, saw house prices go up by 2.7 per cent.

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The 0.7 per cent increase in the latest quarter follows a fall of 1.4 per cent in the previous quarter and a drop of 4.3 per cent in the quarter before that.