But lack of mortgage lending will mean a year on year drop in price increases overall

House prices in Scotland increased for the second successive month in August, fuelled by an increase in mortgage lending over the summer.

However, analysts have warned that year on year growth in prices has dropped to -1.7%, and is expected to fall further as 2011 price increases fail to match those achieved a year ago.

Gordon Fowlis, regional managing director of Your Move, commented: “The traditional increase in activity over the summer has pushed up prices, but they remain low compared with last year.

“House sales have picked up over the summer as buyers have taken advantage of mortgage lenders offering better loan-to-value products and loosening lending criteria to lower income buyers. But mortgage lending remains painfully depressed, which is hampering the long term rehabilitation of prices.

“Lack of mortgage finance is stifling demand at the bottom of the market and pushing down annual prices. Let’s not forget mortgage lending was at its lowest level for two years back in the early part of the spring, and although the market has seen the traditional summer improvement, it is depressed compared to 2010, when the economy was growing faster and consumer confidence was higher.”

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