Tough mortgage lending conditions push house prices down by £6000

Homes in Edinburgh experienced some of the sharpest declines as values fell almost £17,000 annually.

House asking prices rise

The average house price in Scotland has fallen by more than £6000 in a year, with tough mortgage lending conditions contributing to the decline, according to a report.

December saw the average price paid for a home stand at £140,846, which is £6224 less than in the same month in 2011 - a drop of 4.2%.

It is also the sixth consecutive monthly fall, with prices down more than £1000 from November.

Homes in Edinburgh experienced some of the sharpest declines as values fell almost £17,000 annually. However, the capital remains the most expensive area, with the average property costing £200,981.

East Renfrewshire is now the second most expensive place to buy a home, with the average cost standing at £199,642. Just nine of the country's 32 local authority areas recorded an increase, the latest LSL/Acad Scotland House Price Index shows. Aberdeenshire, East Renfrewshire and the city of Aberdeen all saw price rises from December 2011, along with Argyll and Bute, Angus, Moray, Orkney, Dundee and Inverclyde.

Richard Sexton, director of e.surv chartered surveyors, part of LSL, said: "Tough mortgage lending criteria and public-sector austerity bit the Scottish housing market hard last year, chewing £6000 off the average house price. Values have now fallen for six months on the trot and December alone saw over £1000 knocked clean off the average house prices.

"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.

"The comparison with England and Wales doesn't make pretty reading: 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."

Experts said house prices in Scotland are falling at a faster rate than in England and Wales, partly because there are more sellers than buyers north of the border, which requires prices to be lower to achieve a sale.

Dr Peter Williams, chairman of Acadametrics, said: "Will house prices continue to decline in Scotland in 2013? There are some signs to suggest that the opposite may happen, and that demand for properties may increase over the year. The Funding for Lending Scheme introduced by the Bank of England has led to more competitively priced mortgage products becoming available, with restrictions on mortgage requirements being eased.

"This should result in improved mortgage volumes and hence an increase in demand. Favourable employment statistics and an upturn in first-time buyer activity also point to more confidence among both lenders and buyers.

"This may tempt more buyers back into the market and lift the level of transactions. Only time will tell, but with new housing supply remaining so low, prices will be underpinned by shortages, except in those areas where low demand and over-supply remains."

One account. All of STV.

This field is required. That doesn't look like a valid e-mail format, please check. That e-mail's already in our system. Please try again.
ShowHide
Forgot password?
This field is required. At least 6 characters please. Did you enter your details correctly?
If you've forgotten your details then use the 'Forgot password?' link.
Need to reset your password?

We'll send a link to reset your password to

We've sent you details on how to reset your password

Please check your email and follow the instructions.

Forgotten your email address?

Have you forgotten the email address that you previously joined with? Don't worry, by emailing enquiries@stv.tv we can help.

One account. All of STV.

This field is required. Please enter at least 2 characters
This field is required. Please enter at least 2 characters
At least 6 characters please
ShowHide
This field is required. At least 6 characters please.
You have to be 16 or over to join
This field is required. This doesn't appear to be a valid date
Type your full postcode and select your address This field is required. It doesn't look like you've entered a valid postcode. Can't find your address? Confirm the details you've given us are correct by clicking here

By continuing you agree to our Terms of Use, including our Privacy Policy and Cookie Policy. Any issues contact us.

Upload Profile Picture

Please make sure your image is under 2mb in size and a valid JPG, PNG or GIF.

Are you sure?

Unfortunately, you'll be unable to access our premium content. We’ll be sorry to see you go, but if you change your mind you can rejoin us at any time.

Please verify your STV account

Please verify your STV account using the email we sent you. If you have lost the email, we can send you another one, just click the button below.

Thanks

We've sent you a new verification email.
Please check your email and follow the instructions to verify your account.

Welcome to STV
Thanks for joining us.

Oops!

Sorry, you must be at least 12 years old to place a vote for your Real Hero.

Please review our Voting Terms of Use for more information.

Oops!

Sorry! It seems that you are using a browser that is incompatible with our voting service.

To register your vote please copy the below URL in to your regular mobile browser. We recommend Google Chrome, or Safari.

http://shows.stv.tv/real-heroes/voting

Oops!

Sorry, you seem to have already voted in this category.

Thanks for voting

Now share your vote with friends on your social network

Share on twitter Share on facebook

Cast your vote

Please register or sign in to continue.

Cast your vote

This field is required. This doesn't appear to be a valid date

Cast your vote

Please fill out this form to cast your vote. As you are under 16 years old you will not create an STV account. Why do we need these details?

This field is required. Please enter at least 2 characters
This field is required. Please enter at least 2 characters
This field is required. That doesn't look like a valid e-mail format, please check.
Location This field is required.
Parental Consent This field is required.

That's you. All that's left is to click the 'Submit Vote' button below. By doing so, you confirm that you and your parent or guardian have read and accept our Voting Terms of Use, Privacy Policy and Cookie policy, and that the details you have entered are correct. We'll look after them as carefully as if they were our own.