However, the modest house price growth of 0.3% and 0.4% in July and August respectively, recorded by LSL Property Services and Acadametrics, has been described as a “flash in the pan”.
Year-on-year, Scottish house price growth continued to fall, down 1.7% in August compared to a 1.5% drop in July.
LSL and Acadametrics predicted annual growth will slow further as 2011 fails to match the increases seen in 2010.
The average house price in Scotland was £148,075 in August.
Richard Sexton, business development director of LSL subsidiary e.surv, said that house prices have been pushed up by increased activity over summer, driven by higher LTV products and looser criteria.
However, he highlighted that transactions remain low compared to last year and mortgage lending remains “painfully depressed”, continuing to stifle demand.
Sexton said: “The increase in mortgage lending over the summer was a flash in the pan and won’t be sustainable in the current climate of stagnant economic growth and restricted credit conditions.
“Banks will be focusing on targeting wealthier borrowers at the expense of first-time buyers, who are traditionally the lifeblood of the property market. This will choke off demand at the bottom of the ladder and reverberate all the way up the chain, slowing house price growth. On top of that, once public sector cuts begin to bite unemployment will rise and transactions will fall.”
He added: “We expect lending and house prices to be subdued over the coming months, particularly on an annual basis, and will only be resuscitated by an improvement in the economy, and in particular the turbulence in the eurozone.”
