Capital house prices slump 7% in a year; Credit crunch still taking its toll on property market.

HOUSE prices in Scotland's capital city fell by nearly seven per cent in the first quarter of this year, it emerged yesterday.

And across east central Scotland, average prices fell 7.2 per cent to pounds 180,545 compared with the first quarter of last year as the credit crunch continues to take its toll.

In Edinburgh, a year-on-year fall of 6.8 per cent took the average price of a home in the capital to pounds 195,895.

For the month of March alone, the average house price was pounds 194,683 - a year-on-year decrease of 12.6 per cent.

Ron Smith, chief executive of Edinburgh Solicitors' Property Centre who compiled the figures, said the average house price had remained stable over the last six months.

In Edinburgh, this has seen the average figure sit somewhere between pounds 192,000 and pounds 200,000.

Smith said buyers were continuing to benefit from their stronger position as only one in five properties was achieving its fixed price and the average premium on offers over has come down from 19.6 per cent to 3.3 per cent.

Smith added: "This buyers' market is also showing signs of getting busier as month on month we have seen an increase in the number of properties selling.

"Fewer homeowners are choosing to enter the property market at the moment, preferring to stick where they are.

"The impact of this is that a smaller market, with fewer buyers and sellers, has the potential to provide additional support to average prices.

"If supply remains constrained it is likely we will see a decline in the bargaining position of the buyer." The ESPC said it was too early to say what impact the new Home Reports were having but some homeowners had been discouraged from testing the market in view of the cost that would be incurred.