The value of residential property sold across Scotland fell 7% to £4.1 billion in the first quarter of 2023, with the number of transactions down 11% to 19,124.

The number of transactions in Edinburgh fell 15%.

However, average house prices across Scotland rose 3.8% to £213,850.

That’s according to property agents Rettie, citing data from Registers of Scotland.

Rettie said: “When we reported at the end of last year, a background of rapidly rising interest rates and mortgage rates; an impending recession; and double-digit inflation did cast a gloom over our expectations for the new year.

“We did think that conditions would stabilise and that outturns may not be as bad as some feared. There were forecasts of a double-digit drop in house prices, which we did not countenance. Instead, we expected a decline in transactions and a modest reduction in house prices as the most likely response to worsening economic and lending conditions.

“Some caution does need to be taken with these figures. They are much more inclusive than figures produced by the likes of Halifax and Nationwide as they include all sales – including cash sales as well as those with mortgages. However, because of the time that can be taken from missives to registration, they can run around 2-3 months behind.

“To date, things seem to be playing out similarly to what we forecast. In Q1 2023, for the country as a whole, transactions are down 11% on Q1 2022 levels. This may have further to fall over the year but may improve by the time we get into Q4 as we will then be comparing with the market in the aftermath of the fairly disastrous Kwarteng ‘Mini Budget’.

“There is variance across the country. Transactions actually increased in some local authority areas, including East Lothian, Midlothian and East Dunbartonshire, while, in areas such as Inverclyde and Aberdeenshire they fell by a quarter. In the big city markets, Edinburgh is down 15% and Glasgow by 5%.

“Average house prices are probably holding up better than most expected – up 3.8% on Q1 2022. However, the rate of increase has been steadily dropping back and may still turn negative this year.

“Nevertheless, our forecast of a 5% decline in average prices for 2023 and 2.5% decline in 2024 is beginning to look a little pessimistic.

“Here too, there is variance across the country.

“Average prices climbed by 13% in Argyll & Bute and Midlothian while 7 of the 32 local authority areas recorded year-on-year price falls. Average prices were virtually unchanged in Glasgow and marginally up (1.6%) in Edinburgh.

“On turnover (value of property sold), probably the best indicator of market health, Scotland is down 7% in Q1 2023 compared with the same period last year.

“In the wake of the Q1 2023 outcome, we have decided to maintain our transactions forecasts and revise our house price forecast so that the upper forecast is now the central forecast, i.e. we now expect a more modest reduction in average prices over the year and there is a possibility that they may even edge up further over the course of the year.

“As ever though, events shape markets. These forecasts largely assume current conditions playing out but, as we have seen often in the recent past, there is a need to expect the unexpected.”