House prices in Scotland have suffered the biggest quarterly fall since 1992 according to Lloyds TSB's Scottish House Price Monitor.

The fall was the largest in the monitor's 16 year history. In the three months to October 31 the average domestic property dropped by 4% in value.

Year-on-year the number of house sales also declined by 43%.

The average mix-adjusted Scottish house price is now £165,398. House prices rose by 4.9% overall this year a 4.4% drop on last year.

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Sales of lower-priced properties held up well. There was an underlying annual increase on flats of 4.7%.

Professor Donald MacRae, chief economist at Lloyds TSB Scotland, said: "The Scottish economy is entering a significant slowdown with rising claimant unemployment and falling consumer confidence. The number of housing transactions has declined markedly since one year ago and the market is adjusting to lower prices and sales.

"Although the number of mortgage products has declined, the cost of borrowing has reduced for many mortgage holders with the latest fall in interest rates in early November. So far, the Scottish housing market is showing sensible adjustment rather than a precipitous collapse."

(GK/JM)