Scottish house prices drop 1.4pc

House prices in Scotland declined 0.1% in October compared to the previous month.

LSL attributed the lack of demand from buyers to difficulties in securing a mortgage and not the cost of homes.

Richard Sexton, director at e.surv, said: “Prices haven’t dropped off a cliff and remain relatively stable. With inflation consistently breaching the 5% barrier, property is becoming more affordable, which is encouraging news for buyers.

“Despite headline figures showing the banks are lending more, they are still demanding big deposits, which are keeping the lower end of the market in gridlock. Prices for flats fell faster than any other property type - a sure indicator that the first-time buyer market is sluggish.”

Sexton added that low mortgage rates helped stimulate demand further up the housing ladder by tempting more buyers to trade-up, which was compensating for the lack of activity at the bottom of the market.

He said: “Rising mortgage volumes suggest more buyers who boast large deposits are being seduced by cheap mortgage finance and subdued property prices. The splurge of activity from these buyers is cushioning house prices and preventing them from falling further.”