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Scotland seeing a weak recovery in residential house prices, report shows

In the first quarter of the year the average price of property increased 0.7% compared with the last quarter of 2009 and the average Scottish house price is now £157,801, the Scottish House Price Monitor from Lloyds TSB Scotland shows.
Despite rises in each of the last three quarters, on an underlying annual basis, Scottish house prices have fallen by 3.3% and the rise in the latest quarter is much lower than the 5.9% of the previous quarter, the figures reveal.
The number of house purchase transactions remains low with 19% fewer transactions than in the last quarter of 2009, resulting in a weak overall market. The number of house purchases reached a low point in February but recovered in March and April, but is still around half the level witnessed before the recession.
Price movements in the latest quarter remain volatile and vary from area to area. For example, prices in Dundee show a significant annual rise of 10.7%, this masks the volatility seen in quarterly changes shifting from a positive 16.3% to a negative 10.8% in the last two quarters. Dundee house prices are now at levels last seen 21 months ago.  Edinburgh has experienced a 6.9% fall in prices on an annual basis but a quarterly rise of 3.9%. Glasgow saw an annual price fall of 8.2% and a quarterly rise of 14.7%.
But most areas continue to report an annual fall in prices ranging from 2.5% to 8.2%. One exception is Aberdeen where prices rose 0.9% on an annual basis but are down 1.4% on a quarterly basis.
‘The Scottish economy entered recession in quarter three of 2008 and recorded five consecutive quarterly falls in output. Scotland exited the recession at the end of last year with growth of 0.2% in the last quarter having experienced one quarter less of falling output than the UK over the whole of the recession,’ explained Professor Donald MacRae, chief economist, Lloyds Banking Group Scotland.
He believes the recovery will be slow. ‘Consumer confidence continues to recover from the low at the end of 2008 but is still below pre-recession levels. Retail sales are increasing at an annual rate of 3.9% in March while the volume of housing sales has recovered from the low point of February this year,’ he said.
‘The level of mortgage availability including for first time buyers has increased while the cost of borrowing remains low for many mortgage holders. The rise in the average Scottish house price identified at the end of last year has not been maintained into 2010.  However, activity has picked up from the low levels of the winter months.  The Scottish housing market continues to recover but slowly,’ he added.