HOUSE prices are set to fall in Scotland amid a slowdown in economic growth but a recession will be avoided, according to new figures.

The latest PwC UK economic outlook report found a weaker pound will help boost the economy in coming years.

The report forecasts Scottish gross domestic product growth will slow to about 1.3 per cent in 2016 and 0.3 per cent in 2017, in both years 0.3 per cent lower than the expected UK-wide downturn.

A decline in business investment, particularly from overseas in areas such as commercial property, is blamed for the slowdown, which the report warns could hit construction firms and capital-goods manufacturers.

Consumer spending growth is expected to slow to about 1.3 per cent by 2017 due to a weaker pound pushing up import prices and squeezing household spending.

However, the weaker pound is forecast to boost exports by 2017, moving from slowing gross domestic product to helping accelerate growth.

The report predicts the price of an average home in Scotland will fall £3,000 over the next two years to £134,000 in 2017, bucking the UK national trend of rising property prices.

From 2018 onwards, property prices are projected to recover, rising to an average £156,000 by 2020.

The savings period first-time buyers face for a house deposit has dropped by two years from previous forecasts to 19 years, for those relying solely on their own savings with no family assistance.