Rental values in prime central London down to lowest level for a year

Annual rental growth in prime central London fell to 2.4% in September, which was the lowest level it has been since September last year, the latest data shows.

The report from international real estate firm Knight Frank also shows that the number of tenancies agreed in the three months to August fell 5.9% versus 2014 while prime gross rental yields remained at 2.96%.

The slowdown came against the backdrop of jittery financial markets, with nerves over the state of the Chinese economy spreading to commodity and mining stocks, compounded by declines among carmakers, according to Tom Bill, head of London residential research at Knight Frank.

‘This current overriding mood of uncertainty means companies are more hesitant about recruiting and are more conservative with relocation budgets for senior executives, which has dampened demand in the prime central London lettings market,’ he said.

‘As a result, the number of tenancies agreed in the three months to August fell 5.9% compared to the previous year and the number of viewings declined 10.2%. Such declines suggest the trend for falling rental value growth will persist in the short term,’ he added.

He pointed out that the trend is less marked in both lower and higher price brackets. ‘Demand among younger professionals remains strong while demand at the super prime level of £5,000 per week and above has been buoyed by the fact tenants have moved across from the sales market due to last December’s stamp duty increase,’ explained Bill.