The average house price in Scotland now stands at £158.820.
It says that the latest fall is lower that the previous quarter and that on an annual basis house prices have still risen by 1.6%.
But the volume of house purchase transactions is down a whopping 48% on the levels recorded for the same period last year.
The picture across the country is very mixed with areas reporting the greatest quarterly fall still recording an annual increase. Broadly speaking, the east of the country has witnessed price rises in the last quarter partially compensating for greater falls in the previous three months. Properties in the west have now seen prices fall in the latest quarter.
Professor Donald MacRae, chief economist for Lloyds TSB Scotland, says: “The Scottish housing market has responded to the economic slowdown with a reduction in transactions and in some cases price falls.
“The cost of borrowing has reduced for many mortgage holders with the latest fall in interest rates in early February. The Scottish housing market is adjusting to changing circumstances with reduced sales and in some cases lower prices rather than a precipitous collapse.”