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Scottish house prices 'continue to rise'

16 February 10 00:37 GMT

The Scottish housing market has continued to recover with most areas showing price increases over the past quarter, according to a report.

The latest Scottish House Price Monitor from Lloyds TSB suggested the average price of a home rose to £160,074 in the three months to 31 January 2010.

This represented a rise of 5.9% on the previous quarter.

But prices have fallen by 6.8% in the past year, with the number of sales halving since the onset of recession.

Dundee saw the biggest house price rise over the past quarter at 16.3%, while Edinburgh saw an 11.4% increase, the south west an 11.2% rise and the south east recorded a 10.4% increase.

House prices also rose by 7.3% in Aberdeen and 8.4% in the north.

But both Glasgow and the Central/Fife/Perth/Tayside grouping recorded drops of 1.6% and 7.6% respectively.

All areas continued to report an annual fall in prices ranging from 2% in Dundee to 12.1% in Glasgow, the report said.

Detached houses had been declining in price every quarter for the last two years, but this fall has been reversed with an increase in the latest quarter of 12.6%.

The authors of the report said this price rise may have been influenced by the ending last year of the temporary lower starting limit for payment of Stamp Duty Land Tax, encouraging purchases before the year end.

Professor Donald MacRae, chief economist at Lloyds Banking Group Scotland, said: "The Scottish economy entered recession in quarter three of 2008 and has since recorded five consecutive quarterly falls in output with possibly a sixth quarterly fall yet to come.

"However, business surveys point to an exit from recession in early 2010.

"Consumer confidence has recovered from the low at the end of 2008 but it is still below pre-recession levels."

Stamp duty

Professor MacRae said mortgage availability had increased, including for first-time buyers, while the cost of borrowing remained low for many mortgage holders.

But he added: "Although a house price recovery is evident in Scotland, it is based on much reduced levels of activity. Nevertheless, the Scottish housing market is now into recovery."

The number of transactions in the Scottish market was reported as falling by 65% between February 2008 and a low point in February 2009.

Between December 2008 and December 2009, the number of transactions rose by 25%, helped in the final month by the rush to close deals before the end of a stamp duty holiday on lower value homes.

The Halifax/Bank of Scotland survey of house prices, most recently published in late January, contrasted with Lloyds TSB Scotland in showing Scottish prices falling in the final quarter of last year by 1.4% on the previous quarter. The UK average rose during that period by 3.5%.

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