Lloyds TSB: Scottish housing market reaches plateau

Following mix adjusting, the average Scottish house price is now £155,528.

Once again, the latest house price movement has been generated from a market with a low number of sales, however, compared to the same quarter one year ago, the number of transactions in the Monitor is up by 4%. Average prices from all areas of Scotland show a corresponding increase in volatility over the last four years.

For the market as a whole, Scottish house purchases during the last three months of 2011 were almost identical to the same period of 2010. For the month of December, the number of transactions was 3.3% up on the same month in 2010. In the last five years, the lowest number of transactions was recorded in February 2011. It seems likely that the level of activity this spring will be similar to that of last year.

Donald MacRae, chief economist, Lloyds TSB Scotland, said: "The Scottish economy exited recession at the end of 2009 with a rise in output of 0.2%. After four quarters of rising output, GDP fell in quarter four at the end of 2010. Three consecutive quarters of growth followed with a robust rise of 0.5% in quarter three 2011. The Bank of Scotland PMI indicator has been positive for all of 2011 and is again positive for January 2012 suggesting a continuation of growth but at low levels.

"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 91% of their peak of three and a half years ago. Consumer confidence fell further during the last quarter of last year due to a high level of retail price inflation in excess of increases in earnings, squeezing disposable income.

"The Scottish housing market appears to have plateaued in both sales numbers and price movements. There is no sign of a vigorous recovery in the Scottish housing market but equally no sign of a further precipitous fall in either house sales or house prices. The Scottish housing market remains ‘down’ but not out."

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