HOUSE prices dropped by 2.6% in the Scottish Borders in May, new figures show.

But the drop does not reverse the longer-term trend, which has seen property prices in the area grow by 15.2% over the last year.

The average the Scottish Borders house price in May was £195,648, Land Registry figures show – a 2.6% decrease on April.

Over the month, the picture was different to that across Scotland, where prices increased 1.1%, and the Scottish Borders was lower than the 1.2% rise for the UK as a whole.

Over the last year, the average sale price of property in the Scottish Borders rose by £26,000 – putting the area ninth among Scotland’s 32 local authorities with price data for annual growth.

An imbalance between supply and demand for properties has remained the primary reason behind climbing house prices across the UK throughout the pandemic.

But activity is starting to slow, with soaring inflation putting household budgets under pressure.

Sarah Coles, senior personal finance analyst at financial advice company Hargreaves Lansdown, said: “The average house price hit another record high in May, and rose faster than any time since the peak in June last year.

"However, we’re starting to see small changes in the market, which are likely to mean weaker growth in the coming months, especially if interest rates are hiked in August."

First-time buyers in the Scottish Borders spent an average of £152,000 on their property – £19,000 more than a year ago, and £37,000 more than in May 2017.

By comparison, former owner-occupiers paid £231,000 on average in May – 51.5% more than first-time buyers.

Owners of detached houses saw the biggest fall in property prices the Scottish Borders in May – they dropped 3.1% in price, to £337,216 on average. But over the last year, prices rose by 18.1%.

Semi-detached: down 2.6% monthly; up 16.2% annually; £202,506 average

Terraced: down 2.2% monthly; up 15.1% annually; £167,016 average

Flats: down 2.6% monthly; up 12% annually; £106,597 average

Buyers paid 4.3% more than the average price in Scotland (£188,000) in May for a property in the Scottish Borders. Across Scotland, property prices are higher than those across the UK, where the average cost £283,000.

The most expensive properties in Scotland were in Edinburgh – £322,000 on average, and 1.6 times as much as more than in the Scottish Borders. Edinburgh properties cost 2.9 times as much as homes in Inverclyde (£113,000 average), at the other end of the scale.