The latest results show that house prices in Scotland continued to rise, albeit at a less firm rate, but enquires, sales and new instructions all dropped, continuing a downturn in activity that has been evident in the survey’s figures for several months.

Looking at new buyer enquiries, this is the fourth consecutive month of negative readings, with a net balance of -25 per cent of Scottish respondents recorded.

With respect to agreed sales, a net balance reading of -19 per cent was posted in August, and sales predictions for the three months ahead also slipped further into negative territory (-15 per cent in August compared to -9 per cent in July). 12 months ahead, sales expectations have also now been negative for four consecutive months (a net balance of -29 per cent in the latest survey).

In terms of supply, the continued lack of homes coming onto the market is illustrated by the new instructions indicator being in negative territory for the 13th consecutive month. This lack of supply has been a crucial factor in underpinning growth in house prices. A net balance of +32 per cent of Scottish respondents reported an increase in house prices during August, down from +51 per cent in July, but comfortably above the long run average.

Scottish respondents on balance expect prices to be higher in a year’s time as well. 12-month price expectations have eased in recent months, from a net balance reading of +76 per cent back in February to a figure of +37 per cent in the latest results, but remain higher than most other UK regions.

Craig Henderson MRICS, of Graham & Sibbald in Ayrshire, said: “As increasing inflation rates affect confidence, we are seeing caution being exercised in most market sectors, but demand still appears to outstrip supply. This is likely to continue through the autumn months, but increasing energy bills may affect confidence. It could be an interesting few months ahead.”

John Brown FRICS, of John Brown & Company in Edinburgh, said: “Expected caution is now more obvious as buyers react to cost increases but demand is still positive. The market for flats of which there are always more for sale is sensitive to pricing and purchaser ability to complete. Family housing with limited supply line is still competitive. Quieter times ahead.”

Tarrant Parsons, senior economist, added: “Concerns over the economic backdrop and rising interest rates continue to take their toll on market momentum, with strong activity early in the year now giving way to a more subdued picture. Moreover, given projections for the UK economy point to a potential recession emerging towards the end of 2022, respondents envisage housing sales continuing to slip in the coming months.”