Blair Stewart, Head of Edinburgh City Residential Sales at Strutt & Parker, said: “The 15% drop in average value when comparing the first quarters of 2015 and 2016 is alarming at first glance but this simply serves to underline the huge spike in sales before the introduction of Land and Buildings Transaction Tax in April last year. It is not surprising that the 2016 average property price is less in comparison. (See animated Map illustrating the LBTT sales rush last year.)

“Correspondingly, we have noticed an adjustment in the average sale prices of the properties we are selling in Edinburgh change from around £780,000 to approximately £600,000.

“The 22.4% jump in the number of sales in Edinburgh is therefore far more indicative of the strength of the market. The high volumes in Edinburgh are partly reflective of a surge in the purchases of investment properties before the LBTT surcharge was introduced at the start of April. In general, additional and investment properties are lower in value, which is illustrated by both the jump in transactions and drop in average value.

“However, these figures also show a strong performance in the market in the first months of 2016 and I am confident we will see that continue into the summer. A true picture of the market will become clearer over the next six months once we are able to analyse figures which have not been distorted by either LBTT or the additional 3% surcharge.”

Malcolm Leslie, Partner in Strutt & Parker’s Country House department in Scotland, said: “Our experience is that LBTT is still affecting transaction numbers at the top of the market but the effect is less pronounced further down the market. However, it does give buyers an excuse to offer less and that is reflected in the drop in average value.

“The high increase in Midlothian transactions could have been influenced by the number of new properties being built and coming to the market around the Borders Railway Line Stations such as Newtongrange and Gorebridge.

“Overall, these figures present a positive picture as they show steady demand for sensibly priced properties.”

In Aberdeenshire, the average value dropped by 14% and the volume of sales dropped by 9.6%, quarter on quarter. Aberdeen and Aberdeenshire are two of just three Scottish regions to have seen a fall in sales.

David Strang-Steel, Partner in Strutt & Parker’s Banchory office, said: “The Aberdeenshire figures also show a decline in average value which is largely due to the abnormally high prices at which properties were exchanging hands before the introduction of LBTT. Any market analysis must take that artificial distortion into account.

“The long-term picture shows a steady increase in Aberdeenshire property prices over the last 10 years and, despite a drop in the last 12 months, Aberdeenshire property prices (£212, 182) remain significantly higher than the average in Scotland (£159,198).

“The fall in sales volumes in Aberdeen (-10.1%, 920 to 827) and Aberdeenshire (-9.6%, 995 to 899), however, underlines the impact the fall in oil price has had on the north-east property market.

“What will happen next is largely dependent on the oil economy. Any upturn in the property market is going to be dependent on the oil price and no one is predicting there will be any improvement this year. I do not think we will see an upturn until 2017 at the earliest and possibly 2018. However, expectations are adjusting and sellers in the premium property bracket are being a lot more realistic than they were last year.”