Scottish property prices fall for sixth month in a row

Residential property prices in Scotland have fallen by 4.2% in the last 12 months to an average of £140,846, according to the latest LSL/Acadametrics index published today (Wednesday 13 February).

It says that some £6,224 has been wiped off prices since December last year thanks to a lack of mortgages and values in Edinburgh are down over £16,000 annually.

In December prices were down 0.8% on the previous month and prices have now fallen for six months in a row. Last month alone saw £1,100 knocked off the average house price.

‘Tough mortgage lending criteria and public sector austerity bit the Scottish housing market hard last year. A lack of first time buyer loans is the root cause of the Scottish market’s ills. Mortgage lenders have married high deposit requirements with strict credit scoring criteria, which are keeping would be first time buyers in rented accommodation,’ said Richard Sexton, director of e.surv chartered surveyors, which is part of LSL.

The data also shows that house prices in Scotland over the year have fallen by more than four times that of any region in England and Wales.

‘Scotland’s greater exposure to public sector cuts is one reason. The other is the Bank of England’s Funding for Lending scheme and its lack of impact north of the border. The scheme has been far less effective in Scotland, which is making mortgages scarcer and more expensive than in England and Wales,’ explained Sexton.

But there is plenty of regional variation. Despite the sharp fall in the national average house price in 2012, prices have risen in almost one in four local authority areas. Prices in Edinburgh plummeted £16,658 annually, but rose £2,831 in Aberdeen City.

Sexton believes that the market has scope for improvement in 2013. ‘Lower house prices mean smaller deposits, which will inch some buyers closer to owning their first home. South of the border, mortgage rates for new buyers have fallen to historic lows, and there is a much wider range of mortgages to choose from, which gave the market a leg up on the way to a bumper January. Scottish buyers will be hoping for something similar in the coming months,’ he said.