HOUSE prices in Scotland have dropped by almost £3000 to their lowest level in two years, according to new figures.

In January 2012, the average cost of a house in Scotland was £145,607 compared to £148,292 in February 2011, a 1.9% drop.

The fall left property prices at a level last seen in December 2009, the latest LSL Acad Scotland House Price Index said.

Prices in January were down 0.9% on the previous month, the fourth consecutive month in which they have dropped.

The average price of a flat fell 8% on the previous month, which the report said reflected the slow first-time buyer market.

Gordon Fowlis, regional managing director of Your Move, said this was also choking off activity at the upper levels of the market.

He said: "This is forcing sellers to slash their asking prices and is stymieing any chance of prices rehabilitating to their previous highs."

However, transactions in January 2012 were up 7% on January 2011.

East Lothian saw the biggest drop in house prices, which fell by 9.9% from £204,223 in January 2011 to £183,963 in January 2012. The biggest rise was in Orkney, where prices rose 16.9% from £115,034 to £134,460.