£5,000 drop in average house prices

Dec 19 2012

House prices in Scotland have fallen by more than £5,000 in a year, sparking an increase in sales, according to a report.

The average house price in October this year was £142,246, down from £147,494 in November 2011.

The fall sparked the strongest October sales since 2007, with about 7,000 transactions, almost a quarter more than in the previous month.

Analysis by LSL Property Services found that landlords are taking advantage of the lower prices while many first-time buyers continue to struggle to get a mortgage.

Richard Sexton, director of e.surv chartered surveyors, part of LSL, said: "At first glance, sales increasing by almost a quarter between September and October looks very encouraging, suggesting more lower-income buyers are finally getting a foot on the property ladder.

"But in actual fact a spurt of activity from residential landlords drove the increase.

"Terraced property and flats are particularly cheap by historic standards, largely because the first-time buyers who would typically buy them can't get a mortgage, so landlords are taking advantage and snapping them up at bargain prices.

"Over the longer-term, prices have been dragged down by over £5,000 over the past year because the property market is riddled with chronic structural defects that have persisted and, in some cases, worsened since the financial crisis.

"Mortgage finance is painfully restricted. Disposable income is low. And consumer confidence has been cut to ribbons.

"First-time buyer numbers so far this year are 10% higher than they were this time last year, but exactly the same as they were in the equivalent period during 2010, which was hardly a strong year."