While this blog does not usually focus entirely on any one part of the UK, the figures released yesterday by Lloyds TSB Scotland require some comment. They show that Scottish house prices have fallen dramatically in the past three months.

The bank’s Scottish house price monitor reported the average Scottish house price was £152,565, almost the same level as early 2007.

This means that, in the three months ending July 2011, the quarterly price index for the average domestic property in Scotland fell by 3.7%.

The number of sales was reported to be low, but had increased since winter, with house purchases recorded in the last quarter 27% up on the previous three months.

However, the number of housing market transactions was still less than half pre-recession figures.

With growing concern over the economic and social North-South divide of the UK, this news is as worrying in London as it is in Scotland itself. The regional disparities between London and other parts of the country is growing by the month and acts as bots a signpost and catalyst for other economic divergence.

A spokesman for Lloyds TSB Scotland made the point that the Scottish housing market has adjusted to the recession with a halving of sales and a period of volatile price movement over the last three-and-a-half years.

However, this means that average house prices in Scotland are now only marginally up on the levels of four-and-a-half years ago.

The Scottish housing market did experience the normal effect of spring this year on sales and purchases but the impact was much more muted than in other years.

The Scottish economy more generally has seen the weak housing market coupled with a drop in disposable income because of retail inflation exceeding earning increases hitting consumer confidence to a greater extent than in England.

To ensure a recovery in the housing market, the economy north of the border now needs a resurgence of both business and consumer confidence even more than the north of England. This will require the disparate politicians in control of the legislatures of London and Edinburgh to put their differences aside and work together to solve the problem.

As the world sleep-walks blearily through August and most people are happily ensconced on their summer break (mine was very nice thanks), there are some real news items trying to make headway in the traditional silly season.

For example, this week it was revealed that house prices rose in many areas of the UK in June compared with the previous month, but year-on-year values have fallen, according to official government figures.

On average, prices increased by 0.6% in June compared with the previous month, the Department for Communities and Local Government (DCLG) said. The average UK home was valued at £204,981, although prices were down 2% from a year ago.

But London again bucked the trend, with a year-on-year rise of 1.5%. The annual change was sharpest in Northern Ireland, where prices fell by 8.1%, followed by Wales, down 5.6%, and Scotland, down 2.3%.

In England, year-on-year prices fell by 1.8%, with regional changes ranging from a 5.1% fall in the North West of England to the rise in the capital. However, seven of the nine English regions showed month-on-month increases. This was greatest in London with a 1.6% rise in June compared with May. Only Yorkshire and the Humber (down 0.5%) and the North West (down 1.4%) recorded falls.

The snapshot lags behind other house price surveys, although figures from the Halifax also showed month-on-month price rises recently.

The DCLG figures were published the day after property website Rightmove said that house sellers had been dropping their asking prices. It said asking prices fell by 2.1% this month after a 1.6% fall in July, but the gap between asking prices and selling prices remained wide.

In related news, those in the north of the UK are more likely to face mortgage arrears than those in the south, according to an analysis by credit ratings agency Standard and Poor’s.

The agency looked at a sample of 1.5 million home loans across the UK and came to the conclusion that the widening north-south gap in arrears is partly due to the significantly more robust employment trends evident in the south of the UK since the start of the recent downturn in 2007, compared with the trends in the north.

The Standard and Poor’s study also found that more mortgage borrowers in the north continue to be in negative equity. It is believed that the sluggish housing market in northern regions over recent quarters may be partly responsible for this rise.