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Scottish residential property market activity recovers from winter low

On an annual, underlying basis Scottish house prices have increased by 0.4%, and in the three months ending July 2011, the quarterly price index for the average domestic property in Scotland fell by 3.7%. Following mix adjusting, the average Scottish house price is now £152,565.

The latest house price movement has been generated from a market with a low number of sales once more, but showing a sizeable increase in activity from the winter months, the report says. The number of house purchases recorded in this quarter's Monitor is 27% up on the last quarter.

For the market as a whole, Scottish house purchases in the first half of 2011 were 12% less than in the same period of 2010. The number of transactions in June 2011 was 17% down on the previous year. There has been a recovery in the number of housing market transactions from the depressed levels of January and February but to less than half pre-recession figures.

‘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 0.1% in quarter one of 2011,’ said Donald MacRae, chief economist at Lloyds TSB Scotland.

‘The Scottish housing market has adjusted to the recession with a halving of sales and a period of volatile price movement over the last three and a half years. Average house prices in Scotland are now only marginally up on the levels of four and a half years ago,’ he explained.

‘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 experience the normal effect of spring this year on sales and purchases but the impact was muted. The number of transactions increased from the depressed levels of winter but remained below the levels of one year ago. The Scottish housing market awaits a resurgence of both business and consumer confidence for a faster recovery,’ he added.