While house prices in central London’s prime property market face an ongoing struggle with less homes going on the market and asking prices being reduced, the issue is also feeding through to the lettings market.
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According to Knight Frank’s latest research, rents in the prime central London area declined by 2.1% year-on-year in February, marking two full years of rental price falls in this sector. The same percentage drop in rents was seen in the year to January figures as well, although the agent does expect to see an uptick of 0.5% in prime central London rents in the year ahead.
The fall comes in spite of growing demand, with 17.6% more prospective tenants hoping to rent homes in the area in January, according to Knight Frank, while 6.4% less properties were advertised to rent in the year to January 2018 than the previous year. It is this increasing demand that could see rental values retain some of their strength in the coming months.
Testing times for prime London
A statement said: “The prolonged nature of the adjustment in prime London rents is due to the high levels of supply introduced to the market in recent years, including during the period following the introduction of an additional three per cent rate of stamp duty for landlords in April 2016.”
“As new supply moderates and demand strengthens, we expect to see continued upwards pressure on rental values.”
On the sales side, prime property in London has seen a rising discrepancy between original asking price and final selling price, with the average gap now reaching around 10%.
While the past decade has seen the capital’s rental prices soar more than most other parts of the country, the levelling off seen recently, particularly in the prime property market, spells a major change for the London property sector. Although demand in the capital will always be high, other regions such as the north-west and the midlands are taking off where London property has begun to stall, and are proving to be the next big property market hotspots.
