David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains, said: "The sharp rise in transactions in September has given way to an October slump.
"At the end of the summer, a flurry of buyers jumped at the chance to take advantage of some extraordinarily low mortgage rates, rolled out at the end of the summer.
"But, last month, growing fears about the euro zone crisis caused lenders to rein themselves in and that has reduced the volume of transactions. Nonetheless, the market has been supported strongly by buyers who have large enough deposits to satisfy lending criteria, which accounts for the modest price rise seen last month.
"For these buyers, the currently subdued market along with ultra-low mortgage rates means now is a great time to make a purchase.
"In London, prices rose 2.5% in the three months to October, but in all other regions, annual prices fell in the same period. The strength of London’s economy combined with a massive influx of foreign investors, caused primarily by the Arab Spring and the euro zone crisis, has pushed the capital’s prices in the opposite direction to those in the rest of the country, where tight mortgage finance and an uncertain economic future have convinced lenders not to come out of their shells.
"Outside the capital, prices have fallen by an average of 2.7% since October 2010. By far the biggest falls were seen in the North of England, where annual prices in the three months to October fell by 7.9%. The next fastest fall was seen in the West Midlands at 4.5%, meaning prices in the North are falling about twice as fast as any other region. This is primarily due to lenders’ fears about the impact public spending cuts will have on the region, which has led to tight mortgage finance and reduced buyer confidence.
"It is testament to the resilience of the national market that the ongoing economic problems the nation faces have not caused property prices to fall further in the last 12 months. This shows that, where mortgage finance is made available, buyers still have a strong desire to step onto the ladder."
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