It means that prices are now at 90% of their peak value even though on an annual, underlying basis, Scottish house prices have fallen by 2.9%.
Following mix adjusting, the average Scottish house price is now £155,805, according to the latest Scottish House Price Monitor from Lloyds TSB Scotland.
It points out that the latest house price movement has been generated from a market with a low number of sales but showing an 8% increase in activity from the three summer months ending in July. However, compared to the same quarter one year ago, the number of transactions in the Monitor is down 5%.
For the market as a whole, Scottish house purchases in the first nine months of 2011 were 9% less than in the same period of 2010. The number of transactions in September 2011 was 5% down on the previous year. There has been a marked recovery from the depressed levels seen in the grip of winter in February this year but the overall number of housing transactions in Scotland remains well below half of pre-recession levels.
‘The Scottish economy exited recession at the end of 2009 with a rise in output of 0.1%. After four quarters of rising output, GDP fell in quarter four at the end of last year, followed by a slight rise of 0.2% in quarter one of 2011,’ said Donald MacRae, chief economist, Lloyds TSB Scotland.
‘This was followed by an even smaller rise of 0.1% in the three months ending June this year. This modest rise is largely due to robust growth in electricity, gas and water supply of 12.4%. The Bank of Scotland PMI indicator suggests a continuation of growth in the third quarter of this year but at low levels,’ he explained.
‘The Scottish housing market has adjusted to the recession with a halving of sales and a period of volatile price movement. Average house prices are now 90% of their peak of three and a quarter years ago. Consumer confidence remains low due to high levels of retail price inflation in excess of increases in earnings squeezing disposable income.
‘The Scottish housing market did recover from the depressed levels at the beginning of the year but the overall number of sales remains at less than half of pre-recession levels. A faster recovery awaits a resurgence of both business and consumer confidence,’ he added.
