safe as houses?

House prices in Edinburgh and Glasgow have slumped in the past three months and are set to fall further.

The average price of a home in Edinburgh in the three months to the end of June was £219,530 - down 3.6 per cent from the same period last year. The average selling price of a flat in the Leith Walk and Easter Road area of the capital is now under £100,000 for the first time since 2006.

House prices in the west of Scotland have also tumbled. Prices were 2 per cent lower in the last quarter than in the same period last year, taking them back to 2006 levels. The average selling price of a home in Strathclyde is now £136,000, almost £3,000 lower than a year ago.

There were sharper falls elsewhere in east-central Scotland. The average price of a home in Midlothian in the last quarter was 10.8 per cent lower than a year ago, while the West Lothian average plummeted 9.5 per cent.

David Marshall, business analyst at ESPC explained "There are around 30 per cent more properties available for sale than you would normally see at this time of year, and the number of properties selling is around half that seen prior to the credit crisis,"

Martin Ellis, housing economist at Halifax, said the market faced "significant headwinds" that would constrain housing demand. "Low earnings growth, higher taxes and relatively high inflation are all continuing to put pressure on household finances."